ESL TESTED BY K-VA-T; MESSAGING MAY FOLLOW

DEENA AMATO-McCOY

ABINGDON, Va. -- If K-VA-T Food Stores here can sustain positive results with its use of electronic shelf labels, the retailer could expand its ESL use to additional stores and employ expanded applications, such as consumer messaging and inventory monitoring.

In the one supermarket where K-VA-T is already testing them, ESLs are providing increased price accuracy and labor savings. The retailer will decide in early January whether it will expand the ESL system to additional stores.

"Once we make our evaluation and weigh the benefits, we will look to expand the system to other stores," said Tom Hembree, senior vice president for the 79-store retailer. "If we expand further, we will make the process a slow one, probably focusing on one store at a time."

K-VA-T intends to deploy 20 additional stores beginning next year, according to a source familiar with the situation.

The retailer's Johnson City, Tenn., Food City store is currently using approximately 15,200 electronic labels, "available on shelves for dry grocery, packaged meats, frozen foods and dairy items," said Hembree.

Price integrity and labor savings are the key benefits the ESLs are providing, he added. "Prior to the system we were seeing close to 99% [price] accuracy, but with the units in place we can achieve 100%," Hembree said. "As for labor savings, because price changes are done electronically we are eliminating the need for human intervention.

"Our operating expenses are lower because we no longer have costs for the generation of labels at headquarters, and the shipping of labels to the store," he added. In addition, "the manpower that we are saving by not manually changing [paper] labels can be redirected into customer service."

K-VA-T eventually expects to take advantage of additional applications available through the units.

"The [electronic] labels have the ability to automatically flash frequent-shopper prices and the savings those shoppers receive, display new item announcements, prompt promotions or advertising, and even monitor our inventory levels," said Hembree. "If results remain positive, we will try to get the most value out of the system as possible."

Hard savings from increased price accuracy and labor savings with ESLs reportedly provide a return on investment within two to three years, according to the source.

ESLs use a liquid crystal display screen to exhibit a product's price. K-VA-T is testing wireless radio frequency devices, rather than wired technology, which draw data from the same computer file used to update a store's point-of-sale system. K-VA-T began testing the units in July.

The DecisioNet ESL system is from NCR, Dayton, Ohio.