LIFE ON THE EDGE

DENISE ZIMMERMAN

Electronic shelf labels have delivered on their promise to ensure price consistency from the shelf edge to the scanner, retailers say, but the jury is out on whether the systems can deliver more than that, particularly merchandising benefits.

Though the industry is intrigued by any additional application that could leverage the investment and speed the payback, executives told SN it's too early to predict whether electronic shelf labels will play a key role in merchandising.

Still, despite those uncertainties, testing of the systems that feed price data to shelf tags and the scanner file from a central database, is steadily growing, according to SN's State of the Industry Report on Supermarket Technology released this month. Among the more than 100 chain and independent survey respondents, 16.3% said they will test the technology this year, up from 14% last year.

However, a more compelling trend emerges when responses from independents are viewed separately. Among those operators with fewer than 10 stores, 16.7% said they would test the technology this year, up from zero last year.

Should those projects come to pass this year, testing of merchandising applications is sure to be included.

"We've played around with it a bit," said Stan Dilworth, vice president of operations at Dill's Food City, Royston, Ga., a five-store operator.

"We might have a unit flashing prices -- the regular and sale price -- or we might put in a message like 'On Sale.' We could also have our competitor's prices in there," he added.

Overwaitea Food Group, Langley, British Columbia, which uses a different vendor's ESL product, is reportedly doing just that. "They collect pricing data from their competitor, program it into their tags and display it along with their own price to show customers they have lower prices," said an industry observer.

Another retailer, using yet a different ESL system, questioned the complexity involved with managing many different kinds of data -- in addition to price files.

"There are probably lots of merchandising things you could do at one store, but when you get to doing it centrally, and deal with an item record that you can send to multiple stores, economically and practically, you are going to be limited," said a pricing executive for a chain whose test is to be fully operational this week.

"If you've got your competitor's price on your electronic shelf label, number one, you've got to communicate to the customer that it's there, and number two, that they have to push a button to see it. What kind of confusion are you going to create?" he asked.

Some electronic shelf label designs feature a customer-activated button that allows a shopper to toggle between different kinds of information.

Other retailers who have tested merchandising applications using electronic shelf labels include H.E. Butt Grocery Co., San Antonio, and the Lucky Stores division of American Stores Co., Salt Lake City.

H-E-B used electronic shelf tags to test shoppers' response to three different merchandising tactics: a shelf tag with a shelf talker bib draped over the device, another tag with the shelf talker and a flashing red light, and a third "control" tag with no merchandising.

The retailer did not reveal results, but did report a measurable movement on the product with both the talker and the flashing red signal.

Craig Wright, vice president of support systems and management information systems for Buttrey Food & Drug Stores Co., Great Falls, Mont., said the merchandising potential of electronic shelf tags is unclear.

"It sounds great, a great way to merchandise in theory," but the strategy is unproven, he said.

Joanne Donley, vice president of information services at Raley's Supermarkets, West Sacramento, Calif., agreed. "With merchandising, there should be potential there. We just don't know yet," she said.

"Just because the device is flashing a message, that itself is not enough to attract the customer," Wright added. "Being able to press a button to get calorie information and cost per ounce is interesting, but I don't think it is enough" to influence a shopper's purchase.

Wright said shoppers typically take three seconds to make a purchase decision and that tight window of time makes it necessary to use shelf talkers and promotional bibs, whether using electronic shelf tags or conventional paper labels.

He told SN the opportunity to load competitor's prices into the labels for price comparisons is an intriguing strategy, but he questioned whether the systems could manage the volumes of data effectively.

One major retailer, who requested anonymity, said if today's technology is not up to the task, it soon will be.

"I think the next generation of interactive systems will probably provide a better avenue to further explore and enhance what is already there," he said. "The interconnectivity of the systems at this point in time, has been more of a hindrance to the further development than anything else.

"However, the newer generation of software and hardware are permitting exchange of information between databases which would make the ability to manage that volume of information more streamlined," he added.

The ability to change prices quickly is seen as an advantage for Shaw's Supermarkets, East Bridgewater, Mass., said Bernie Rogan, spokesman.

"It permits changes to be made during the course of a sales week, as well as on the traditional 'start day' of the week. It greatly facilitates your ability to be competitive" on pricing, he told SN.

He said omitting the time-consuming price-labeling task enables Shaw's to make better use of store labor.

"Individuals typically assigned to do price labeling can be assigned to other jobs. There's plenty to do with all the ancillary services we offer. They can be more productive than going 'ca-chunk, ca-chunk' " with a price-labeling gun, he said.

Ray Ahlgren, director of retail systems, Supervalu, Minneapolis, told SN that technology regarded as cutting edge one year may be de rigueur the next.

"Look at credit cards. People didn't buy into that right away, but moving toward credit cards became a competitive issue. Electronic shelf labels put retailers way over the edge in terms of the whole price integrity issue. Could this possibly become a competitive issue -- that everybody has to put it in because everybody else did?"