PRINTING OWN LABELS SPELLS SAVINGS AT A&P

DENISE ZIMMERMAN

SCOTTSDALE, Ariz. -- Retailers considering electronic shelf tag technology must first "take ownership" of their store-level printing functions.

That mandate was handed down by Frank Clark, director of store automation at A&P, Montvale, N.J. Printing labels at a central company location or at the store level -- rather than through contract with a service bureau, as many retailers do -- can result in savings of 50% or more, he said.

"The first thing is to understand that in-store label printing is required [even with electronic label systems]. It is not possible today to provide all the information electronically that you have on your labels, so you will have to have some form of in-store label printing," according to Clark.

"If you want to get a head start on electronic shelf labels, understand this process, install [in-store printing] first and electronic shelf labels will be much easier."

A&P, which is testing both wired and battery-powered electronic shelf labels in two Connecticut stores and is printing labels at the store level, shared results of cost-benefit studies during the 21st annual Food Marketing Institute Information Systems Conference here late last month.

Clark said companies bringing label printing to a central company location can expect to save 20% to 40%. Taking the process to the store level can save an additional 10% to 30%, he added.

Clark cited other advantages of in-house printing:

Retailers can print labels on demand rather than contend with the seven- to 10-day turnaround of a service bureau, which improves pricing responsiveness.

Labels and signs are printed from the same item maintenance file loaded into the scanner, ensuring pricing integrity.

Hand-written signs and shelf talkers are eliminated, reducing labor costs and enhancing store appearance.

Clark stressed that bringing printing functions in-house enables retailers to directly control and integrate all pricing data, which is necessary for a successful electronic shelf tag program. In-store printing is a critical support tool for electronic labels because some technologies available today only transmit pricing information, he noted.

"If the pack and size change, if the ordering code changes, if the description changes, you might be required to produce what's called a 'surround label' " that is affixed to the plastic electronic shelf tag, Clark said.

Although he declined to reveal the 1,100-store chain's future plans for electronic shelf tag technology, he did say A&P would watch new developments closely.

"I find it very exciting because the marketplace is going to get very warm," he said. "There are new methods of communicating that I never dreamed of that will be coming on line next year. It's amazing how rapidly this technology is growing."

Installation of electronic shelf labels costs between $100,000 and $175,000 per store for 15,000 tags featuring either wired or wireless technology marketed in the United States; solar and infrared communications technology is available from vendors overseas, he noted.

Clark said electronic shelf labels offer impressive strategic advantages.

"You always wanted to be the competition that everybody sat around on Monday and talked about? This is it," he said. "You can react to market-changing conditions almost instantaneously."

Other opportunities that open up with the new technology are computerized reordering of product from the shelf label itself. But Clark cautioned retailers to proceed thoughtfully with realistic objectives.

"One thing I might want to caution you on is that communications must be two-way. You must know that the label received the information and you must have the ability to go out to the label and verify it," he added.

Clark said pricing data maintenance is another area that merits scrutiny. "The label maintenance process must be understood because you can deliver a mistake as quickly as you deliver the correct information."

Estimating the potential savings electronic shelf labels might bring is difficult, he noted. "Cost over time is probably the least understood part of the business model. "We've been installed between six and nine months and we're still learning and changing the cost model for this item."