FURR'S TESTS ESLS, PLANS BIG ROLLOUT NEXT YEAR

ADAM BLAIR

ALBUQUERQUE, N.M. -- A one-store beta test of electronic shelf labels by Furr's Supermarkets here, scheduled for completion in six months, has already produced enough positive results that the retailer is planning a chainwide rollout beginning in 1999.

The 70-store retailer began testing ESLs at a store here in November, using the tags for dry goods and then expanding to frozen items. The next expansion will be to refrigerated foods, according to Gene Denison, senior vice president and chief administrative officer at Furr's.

Denison expects a total of 4,000 to 6,000 ESLs will be used in the store, covering 20% to 25% of all stockkeeping units. The retailer expects a return on investment within one to two years, he added, noting that the ESLs have a price point of approximately $6 each.

"When I was pricing systems about one year ago, the costs were in the $9 to $11 per tag range," said Denison.

Some of the major benefits of ESLs include reducing store labor used to change paper tags, and cutting costs for the paper tags themselves. ESLs can also provide greater price accuracy, because they are updated from the same automated price file used for the store's point-of-sale.

While the ESLs used by Furr's, from Hobart Corp., Troy, Ohio, were indeed providing these benefits in the test, Denison said they brought an unexpected advantage -- greater integrity of shelf sets, especially for products supplied via direct-store delivery.

Previously, "when there were missing or out-of-stock items, paper tags would disappear, either through vendor competitiveness or from a store stocker assuming the product was no longer part of the set," said Denison. With ESLs, "shelf integrity is stronger than expected."

The ESLs also provide Furr's with "the marketing ability to toggle between two prices," said Denison.

Furr's has not begun to measure labor savings from ESLs, since the beta test places the electronic tags alongside traditional paper tags. When ESLs become the only tag the retailer uses, "we'll be able to measure actual [labor] cost savings," said Denison. "This presents an opportunity to change one of the last manual processes in the supermarket."