Electronic Shelf Labels and Dynamic Pricing: The Ideal Match?

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Is 2022 the year to switch labels from paper to electronic?

Maybe. Particularly if you’re already using dynamic pricing.

The retailing business is forever ever-changing, and that’s never been truer than now. Every week (every day?), businesses everywhere race to stay up to date on all the new tech, the always-changing customer journey, and, yes, now even a pandemic. Competition has never quite been as fierce as it’s been in these last couple of years, meaning businesses everywhere have to constantly adapt, rethink, and stay ahead of the curve to succeed. Dynamic pricing and its importance is one example, showcasing how new models can disrupt markets across industries, as we’ve written about and seen with our results, through our predictive pricing solution, which on average increases profits by more than 10%.

From Paper to Digital: Price Labels Are Evolving

One of the potentially biggest tech updates of the year, however, revolves around one of the most common, well-known, traditional elements of the buying experience: the price label.

Is there anything more relatable in the shopping experience than… checking the price? Be it a supermarket, a convenience store, or a pharmacy, we all have the experience of looking at the price label and, from there, deciding what goes in our basket or not. It’s been a constant throughout the decades, a simple label on a shelf or a sticker on a box, telling customers how much something is worth.

These days, when the shopping experience has gone full digital, electronic shelf labels (ESLs) were pioneers, having been created and introduced more than thirty years ago. At the time, the idea just didn’t catch up, and ESLs never became the fixture many expected. Looking back, maybe they were just ahead of their time. That, or it was the fact that, even now, the cost for ESLs can seem daunting. The shopping experience in the meantime has gone full-on digital, became omnichannel, and we’ve been swapping physical baskets for digital ones.

Meaning: maybe now might be the time to rethink, and look at ESLs once again.

ESLs offer many advantages that a simple piece of paper or plastic simply can’t, such as the ability to present extra product info, allow a more personalized experience (why not display a QR code the customer can use on their phone?), reduce waste, and display more accurate information (any price or info can be updated with just the push of a button).

Electronic Shelf Labels: More Dynamic, More Flexible

The flexibility ESL allows is immense, and it’s important to keep in mind that it’s more important than ever to change your prices more dynamically, adapting to supply and demand as it fluctuates. And between using ESLs and changing labels manually every single time, the choice is clear.

At the same time, however, more dynamic doesn’t always mean better. It might make sense in a marketplace like Amazon to change prices with a high frequency, but not necessarily to a stationary retail shop, for example, where customers don’t compare every single price in the store. These days, a lot of retailers get into dynamic pricing to follow the competition, but that solution isn’t a one-fits-all case, as no solution is. Different companies need different models, and while we can say that prices in physical stores should change more frequently, that doesn’t mean that should happen every hour or every day. Each retailer needs a nuanced understanding of what pricing is in order to find the right model for its needs – something, here at 7Learnings, we have extensive experience in.

These days, however, the customer experience needs to merge both the online with the offline, instead of focusing on both separately.

When the pandemic first started, downloads for retail apps spiked, signaling the trend that sees these apps as not simply a transactional channel, but one where customers want personal, adapted experiences to their needs. Not connecting this to what they experience in the physical store would be a waste. This is why companies like Walmart, Carrefour and others are already ripping ESLs’ benefits, and that list will just grow longer and longer as 2022 progresses.

There’s one other aspect it can help with, however, and it’s something retailers need to keep in mind: their pricing strategy.

Pricing Optimization With Label Optimization

We’ve written extensively around dynamic pricing, with a focus on predictive pricing and how it can help retailers across all verticals. Machine learning and its different uses have revolutionized pricing all across the board, be it in demand forecasting and how it can help predict future sales, or in the way how it’s made traditional price optimization methods obsolete. Data and its many uses are essential, not forgetting the way how it can be integrated into every part of the business – including, yes, price labels. 

With dynamic pricing comes, naturally, a more flexible approach to pricing itself and a need to more constantly update the product info and its prices. Why not change your prices based on the season or even just the time of the day? Why not take customer frequency into the equation? Electronic shelf labels allow this to be done faster than ever, opening an array of possibilities unthinkable otherwise, using your existing data to the best of its abilities, much like dynamic pricing itself.

With predictive pricing, you can adapt your products’ prices to your specific needs, objectives, and better follow the trends and customer preferences – meaning, of course, a need to also update your product prices more regularly. It’s here that ESLs can also help, allowing this to happen faster than ever, just as it’d happen digitally. Is there an unexpected demand for a product? Change the price, automatically. A row of products are about to expire? Get them on sale in a matter of minutes. ESLs can also help when it comes to operational costs, of course, as price changes don’t have to be done manually. 

It all boils down to one thing: data, and not just how to best use it but also how to best integrate it. If you’re thinking about switching (or already switched) to ESLs, not having an ideal dynamic pricing strategy means much of your data can go to waste. After all, why change your price if you don’t know what the price should be? This is where our predictive pricing solution comes in, using our tech and your data to predict what your product’s price should be, and how each potential change will affect business. This data, in conjunction with ESLs, can deliver the ideal shopping experience.

This raises one question: WIth all these pros, can electronic shelf labels be useful for everyone? Well, the short answer is no. ESLs can reduce the operational costs of changing prices in physical stores, making it easier to benefit from a dynamic pricing strategy and increase revenue even more. However, can you only use a dynamic pricing approach if you have ESLs, and are they essential? No. Changing prices only once a week or even bi-weekly can already bring great benefits, and ESLs make those easier to implement, but they’re not a must. As we explained at the beginning of the article: more dynamic doesn’t always mean better, and introducing ESLs isn’t always the best step. Like with pricing, the approach towards it should be nuanced and based on a retailer’s needs.

Conclusion

All in all, electronic shelf labels have the potential to finally reach the mainstream this year. While not necessarily a fit for everyone, it’s at least something that every retailer should have in mind and consider. Particularly in conjunction with the ideal dynamic pricing solution, the advantages can be huge, combining the best data with the right automatization. Are you using stationary pricing? Well, then maybe not. But in other cases, maybe you’ll find in ESLs the way to make your business more efficient, dynamic, and up-to-date.

Want to know more on how to use electronic shelf labels in conjunction with predictive pricing, and how one feeds the other? Feel free to reach out, or book a demo directly to know more about how our solution, powered by machine learning, can use your data in the best possible way.