The rapid pace of technological advancement is reshaping various sectors, and the retail industry is no exception. Among the transformative technologies being adopted by retailers, electronic labels have emerged as a game-changer.
The ESL system or the Electronic Shelf Labelling system helps adjust prices according to market shifts, competitors, seasonality or any other macro or micro aspects.
Note: Here’s a read about the difference between Dynamic pricing vs Surge pricing.
In this blog, let’s explore the concept of electronic shelf labelling, delve into the specifics of an electronic shelf label, and focus on the significant benefits of electronic shelf labels, particularly in price management.
What are Electronic Labels?
Electronic labels, or electronic shelf labels (ESL), are a digital upgrade from traditional paper tags used to display product pricing on physical store shelves. These electronic shelf labelling systems utilise small screen devices attached directly to the shelf, capable of displaying and updating product prices, information, and promotional offers in real time.
Moreover, these electronic labels connect with the store's central database through a wireless communication network, facilitating automatic and instantaneous updates on each label. The upshot is a seamless, efficient, and cost-effective solution for retailers that aids in effective price management and strategic decision-making.
Note: Here’s a read about how Dynamic pricing is used in the e-commerce industry.
5 Benefits of Electronic Shelf Labels in Price Management
The concept or definition of ESLs explains how they are used and their advantages in pricing management for retailers across the world. Due to their small screen devices and easy integration with software for checkout and pricing, offline stores can update pricing frequently and maintain revenue and profit growth according to their goals.
Now, let’s look at the benefits of electronic shelf labels in detail and understand how it helps retail operations seamlessly, leaving a substantial impact on price management strategies.
1. Enhanced Accuracy and Speed
One of the primary benefits of electronic shelf labels is the heightened accuracy and speed they bring to price management. Traditional paper labels often fall prey to human errors during manual updates.
In contrast, electronic labels ensure precise pricing information due to their direct link to the store's database, which significantly reduces inaccuracies. Instantaneous updates across the store ensure customers have access to the latest and most accurate pricing information, preventing pricing discrepancies and improving customer satisfaction.
2. Efficient Resource Management
Electronic shelf labelling cuts down the time and labour involved in manually updating paper labels. This results in considerable savings, freeing up staff time that can be redirected to enhancing other aspects of the customer experience, such as customer service or store presentation. The reduced need for physical resources also contributes to a more sustainable business model.
3. Dynamic Pricing Capabilities
A key advantage of electronic labels is their support for dynamic pricing strategies, a crucial tool for competitive price management. Dynamic pricing allows retailers to adjust prices in real-time based on various factors such as demand, time of day, or the pricing strategies of competitors.
For instance, prices can be lowered during off-peak hours to attract customers or raised during high-demand periods to optimise profit margins. Electronic shelf labels enable such swift price modifications, enhancing the store's responsiveness to market changes and improving profitability.
4. Environmental Friendliness
In terms of environmental benefits, electronic labels are a more sustainable choice compared to traditional paper labels. The production, distribution, and disposal of paper labels come with an ecological cost.
Moreover, paper production involves deforestation, water and energy consumption and contributes to pollution. Even when paper is recycled, it requires energy and water to process, and not all paper ends up in the recycling stream.
On the other hand, electronic labels, being a digital solution, eliminate the need for this physical resource altogether. By switching to electronic shelf labels, retailers can drastically reduce their paper consumption and the associated waste, thereby decreasing their carbon footprint.
Furthermore, this can be an important part of a retailer's sustainability efforts and commitment to environmentally responsible practices. Furthermore, customers are increasingly valuing businesses that make efforts towards sustainability, so this switch can also enhance a retailer's reputation and customer appeal.
5. Improved Customer Experience
Electronic labels can provide customers with more than just pricing information. They can display additional product details, QR codes, or promotional offers, contributing to a richer shopping experience. Accurate, clear, and real-time pricing information through electronic shelf labels enhances transparency and trust, which significantly improves the overall customer experience.
Electronic labels and electronic shelf labelling solutions signify a significant leap forward for the retail industry. They offer a transformative tool that brings substantial benefits, particularly in price management.
The switch to electronic labels represents a move towards a more technologically advanced, customer-focused retail experience. Retailers embracing electronic shelf labels are not just modernising their operations; they're optimising their price management strategies, ensuring accuracy, fostering efficiency, and ultimately improving the shopping experience for their customers. The implementation of electronic labels is more than an investment in technology—it's an investment in the future of retail.
How to Implement Dynamic Price Changes Offline Using Electronic Shelf Labels?
Electronic Shelf Labels (ESL) can support dynamic pricing changes offline by storing pricing rules or algorithms directly on the label itself or on the local server controlling the labels.
Here's how it works:
1. Pre-Defined Pricing Rules
Retailers can create pre-defined pricing rules based on certain variables such as time of day, day of the week, or specific date ranges (e.g., holiday seasons). For instance, a grocery store may program its ESL system to automatically lower the prices of perishable goods nearing their sell-by date. Once these rules are programmed into the system, they can be executed automatically, even when offline, as the data required is stored locally.
2. Local Server Control
In some ESL systems, a local server communicates with the individual electronic labels. This server can store pricing information and rules for dynamic pricing, allowing it to execute price changes even when an internet connection is unavailable. Once connectivity is restored, the system syncs up with the central database to update any changes made during the offline period.
It's important to note, however, that while offline dynamic pricing is possible, its effectiveness and the range of variables it can account for are limited compared to online dynamic pricing. Online dynamic pricing can react to real-time changes in market conditions, competitor pricing, and consumer demand—factors that require a live data stream.
Nevertheless, the ability of electronic labels to facilitate offline dynamic pricing demonstrates their flexibility and adaptability, making them a powerful tool in modern retail environments.
How to Implement Dynamic Pricing for Physical Stores Using Electronic Shelf Labelling?
AI-powered pricing management software offers tremendous advantages to offline retail stores for implementing dynamic pricing using Electronic Shelf Labelling (ESL). With easy integration, pricing managers can update the pricing of products at physical stores.
Note: Here’s a read about the Benefits of using Dynamic Pricing for your product assortment.
Here's how the process typically works:
- Data Gathering: AI software collects vast amounts of data, including internal data (sales history, inventory levels, product demand) and external data (competitor prices, market trends, customer behaviour, and economic indicators). For online retailers, this data can also include user behaviour on the website.
- Data Analysis: The software uses machine learning algorithms to analyse this data, identifying patterns and correlations that can inform pricing decisions. It can determine, for example, how demand varies with price, which products are often bought together, or how competitor price changes affect sales.
- Price Optimisation: Based on the analysis, the software can recommend optimal prices for each product. These prices aim to maximise profits, sales volume, or other objectives the retailer sets. The retailer can review these recommendations and adjust them if needed.
- Dynamic Pricing Implementation: The new prices are sent to the ESL system, which updates the shelf labels in real time. This allows the retailer to implement dynamic pricing strategies, adjusting prices quickly in response to changing conditions.
- Performance Monitoring and Adjustment: The software continues to monitor data and measure the impact of price changes. If the results are not as expected, or if market conditions change, the software can adjust the prices again. This ongoing cycle allows the retailer to optimise their pricing strategy continually.
The benefits of using AI pricing management software with ESL include increased sales and profits, improved competitiveness, and significant time savings compared to manual price management. It also allows for more complex and responsive pricing strategies, making the most of the retailer's data to enhance performance.
Do you want a free demo to try how SYMSON can help your business with margin improvement or pricing management? Do you want to learn more? Schedule a call with a consultant and book a 20 minute brainstorm session!
