April 13, 2009
Grocery Chains Test RFID-based Electronic Shelf Labels
By Tom Ryan
Two U.S. grocery-store chains are trialing
an electronic shelf label (ESL) system to help stores avoid using millions
of paper labels annually. Developed by Altierre, RFID-based LCD displays
attach to store shelves to identify products and their prices, enabling
immediate shelf-side updates of product data.
In development since 2003, Altierre considered
a Wi-Fi based solution, but found that the individual Wi-Fi nodes could
not support the sufficient quantity of tags. Wiring electronic tags was also
not feasible since shelving fixtures are often moved. The company considered
radio frequency identification, but could not find any existing technology
that met its requirements.
“We found no chip existed to meet the
cost needs, the low power requirements or the read range we wanted,” Mr.
Saxena explained. Altierre wound up developing its own 2.4 GHz RFID chip
with a proprietary air-interface protocol for use in its electronic shelf
label, which also contains a coin battery and a chip that controls the
label’s LCD screen. Each label’s RFID chip stores the product’s stock-keeping
unit (SKU) number, name, price and other information. Pricing for each
label was not disclosed.
The two retailers, which decline to be named,
have installed Altierre’s RFID readers in the ceilings in several of their
stores on the East and West coasts. A computer server in each store’s back
room receives pricing updates from the retailers’ headquarters via an internet
connection. The server sends those changes to the interrogators via an
Ethernet cable, and the readers transmit the new information to the appropriate
shelf labels. The labels then update the product information on the LCD
screen, as well as send a confirmation to the interrogators indicating
the transmission’s reception.
Mr. Saxena said a store can update the product
information displayed on 10,000 labels in less than an hour. The stores
piloting the system have typically installed two RFID readers to control
25,000 shelf labels deployed across a sales floor measuring 50,000 square
feet in size.
In addition, a handheld interrogator, also
designed by Altierre, can be used by employees to switch the data displayed
on the labels’ LCD from customer information (such as pricing) to data
such as bar-coded SKU numbers that might be utilized to order additional
inventory. The handheld can be used to “flip” that information
on a particular aisle, or throughout the entire store.
The Altierre software also includes a recall
feature. When identified, specific labels for items being recalled flash
a recall alert on the display in bold lettering, immediately warning customers
to not purchase that item.
Altierre also opened a retail technology
center at its headquarters in San Jose, Calif., consisting of a 45,000-square
foot paperless retail demo store and adjacent tech lab.
Discussion Questions: Where
do you see the progress of electronic shelf label technology? What remain
the primary hurdles toward greater adoption?
BrainTrust
Recent Discussions
Discussion Questions
Poll
Simply put; All good if it works properly, accurately, and always.
I know there have been cost and performance challenges that have made ESL’s “not quite there yet” in the past, but I really think the biggest barrier is a process one, not a technology one. If you’re going to use ESL’s, that means you’d better have your planograms in order, and you’d better have store associates that understand and value accuracy in stocking shelves. Because quickly and automatically changing the price is meaningless if it’s not in the right place.
However, that said, I can’t see a future without ESL’s, to be perfectly honest. Price optimization is getting so sophisticated, and some of the things that retailers are trying to do with promotions and special offers, all mean that we can’t rely on manual, paper price tags, especially for grocery. An automated way to update pricing at the shelf is the “last mile” problem. So far, ESL’s are really the only way to solve it.
As noted by previous contributors, technology is great when it works. This article focuses on the high tech challenges of the system. While these issues are being addressed, we should not lose sight of the customer and the benefits the system offers to them. The product recall notification option is huge. Consumers still have a tendency to distrust food retailers when it comes to electronic pricing. Providing additional consumer benefits will go a long way to gaining customer acceptance.
We’re finally getting closer. Two to five years, IMHO. It’s an essential technology. But I remember covering this for Progressive Grocer 20 (yes, twenty) years ago. The earliest attempts stuck out quite a bit from the shelf, and were often bumped by shopping carts. Sometimes when that happened, they exploded, which caused some mild excitement in the aisles. And one company’s prototype worked fine in transmitting price changes from headquarters, but the way the radio transmissions were set up, every time one of the stores got its price changes, the big doors on the fire station next door kept going up and down for half an hour at a time. It took the fire department weeks to get that one figured out. And one of the tags for another prototype “reported in” every few hours to alert the system it was functioning, getting price changes, and all was well. But it went missing for two years (still reporting in) until it was found stuck to the bottom of a pallet in the back room somewhere. But yeah, I think we’re getting closer.
This is an idea who’s time simply must come. The technical challenges, while there, are more tactical than anything else.
This is a huge time drain on store personnel and inaccuracy here fosters multiple other issues of planogram compliance, inventory management and, certainly not least, customer satisfaction.
The big caveat is the same as for all things human when “replaced by technology”. Technology still requires a human to drive it, and humans still make errors — and nothing can multiply a human error faster than technology…
Since they were first introduced, ESL’s three main hurdles have been 1) Physical. Size of the tag has been reduced to workable dimensions with LCD technology. Installation and maintenance challenges appear to be addressed with the application of RFID technology. Cold case (hostile) environment survivability is not mentioned in the article.
2) Operational. See Nikki Baird’s comment about planogram compliance. This is big. 3) Financial. It always comes down to this. I’ve made dozens of ROI projections on ESLs. Based solely on the above description of these labels, I don’t see how any retailer could cost justify them without significant financial support. Is this hidden in the economic stimulus plan somewhere?
I’ve seen the tests for these signs and there’s another factor other than the benefits/challenges mentioned above… [they are not appealing] and NOT food centric.
Imagine standing in a beautiful produce area, alive with color and freshness (key factors as you enter a G store) and pinned in among the strawberries, melons and bananas are green-glow, 1980’s looking, digital signs for “1.99”. It’s distracting and not very easy to read to begin with, but most of all, it’s just plain ugly as it relates to the food.
There’s a delta there that still needs to be figured out, but for starters, for grocery, it should be ALL ABOUT THE FOOD, not about operations so that could be a place to start. How can we make these signs more ‘food centric’??? Is it color? Materials? Glow?? Let’s explore it from a food point of view.
This is a fascinating technology… over time, I have to imagine it will become the standard. The question is – how much time? – which has two elements: One, the technical, which others did a good job of addressing above. Two, the consumer: will all segments accept this now, or is it something they need to get used to? Testing is the right way to figure this out quickly.
Lee Peterson’s comment touches on a significant marketing issue: though small, the devices can obviously do more than convey price. Flashing a color to warn of a recall will not be nearly as regularly useful as flashing a “Top Seller” message on ONLY a few hundred items in the store. This alone could boost sales sufficiently to pay for the whole thing!
OK, I’m not a sharp pencil guy, but with something like 100 items generating 25% of total store sales, blinking those specific SKUs could feasibly deliver 10% lift on those specific items. So what’s a 2.5% total store sales lift worth?
The ability to have shelf-level data is the next evolutionary step from POS to understanding what’s happening in the store, and it provides a more tactical view. So if the challenges can be overcome, or managed, without creating a quagmire then merchandising and supply chain activities could be optimized to realize significant benefit. We’re seeing shelf-level intelligence becoming increasingly important to reduce out-of-stocks and back-room inventories. Retailers and CPG manufacturers, alike, will benefit from this information.
The Holy Grail of Supermarket Retail…An economical electronic shelf tag. The key word being “economical”. Since they did not reveal the price, there is no way to know whether Altierre has achieved the objective or not. I doubt it.
If we can all agree that the challenge with supermarket shelf tags is the price point, then it seems to me a solution that uses passive RFID and printed labels will come to fruition sooner than the active tag approach. Active tags might work for end displays and other promotion areas, but the vast number of center store items simply cannot justify the cost of a “permanent” electronic shelf tag.
Using RFID to manage in-store execution at supermarkets is going to occur before inventory management. One of the very big execution items is the implementation of price changes. Passive RFID can be a huge benefit, identifying items that are changing and detecting missed updates. Yes, store personnel still need to walk the store but it can be done with much more speed and errors can be detected and corrected.
Active shelf displays will come some day, just not yet.
Very glad to see news that the latest generation of ESLs is closing in on a practical cost/benefit ratio. This is a potential breakthrough use for RFID in stores – tiny location beacons within the physical space that other systems may interact with. I can visualize a smart shopping cart recognizing its proximity to a promoted item by detecting the ESL associated with that item. I can visualize a stock clerk triggering an item replenishment with a press of a button on his or her hand-held device.
But it’s not yet clear to me how retailers will ensure the right tags are consistently located in the right places and times, with the right merchandise in the proper stock levels. This seems to me to be less about technology than In-Store Implementation practice. What works well in the controlled lab environment may be difficult to roll out at scale in the absence of systematic, store-chaos-proofed technique.
Also I must add a critical comment about the referenced story: It irks me greatly that the participating retailers are not identified, which means the tech vendor is the source. If and when this test goes into actual stores, local brokers and merchandisers will spot it within moments of installation.
I’m reminded of the interestingly nouveau electronic digital shelf labeling systems of several years ago. Now gone. Do you remember that failed experiment?
From the description provided in this discussion, I didn’t see where shoppers see the price of an item at the shelf. Did I miss something, because I thought the shopper was the most important playah’ in this commercial equation?
There is no reason why ESLs couldn’t address age-old issues, like out-of-stocks and product information (recalls, etc.) today. They can show back room overstock, number of facings, when the next case is coming in, anything you want. They are managed better than traditional paper/plastic tags. They don’t have to be as ugly as they were 20 years ago. The installed price generates an ROI in less than twelve months when ordered in quantity, as proven by very robust ROI modeling. And little, tiny companies, like Carrefour have bought into their viability globally.
No, my company doesn’t sell ESLs, however we need to get past our prejudices of the past and leverage this technology. With few exceptions, we are managing our shelves and floors the same way we did 20 or more years ago. ESLs take the emotion out of so many aspects of the retail execution equation.
This technology is great, noted by many of my peers, but no one is identifying the tremendous cost consequences which are “glossed” over here and the largest issue, that of personal privacy. There are tremendous questions about tracking and identifying people’s movements (i.e. their product movements) in a store and when this stops. All RFID products also include some overage immediately outside of the store and personal privacy and security are some of the largest concerns relating to this.
Stores cannot be tracking and identifying what their customers do and where they go without explicit personal permission each time someone enters the store. There is also a large question about what will be done with all of this data once it has been acquired and how secure the storage will be. This system is a personal security nightmare, which is also why no stores were named in this article…Hmmmm…
A few thoughts on a subject. I spent many years watching in the UK whilst working for Tesco Stores Ltd :
1. LCD for me is not the right technology for shelf edge labels – E-Paper resolves issues of power consumption and reflection as well as appearing to be more like a paper label. With the rise of E-book readers the cost of this technology should start to fall.
2. In many retailers the ESL is now a source of a variety of data about the product intended for both the customer and store staff undertaking replenishment activities. The ROI will come from the combination of these activities not just price changes.
3. The vision we should perhaps be aiming for is not a shelf edge label but an electronic shelf edge strip removing the need to move labels and significantly reducing the effort in re-merchandising fixtures.
4. Multi-channel retailing presents other opportunities for electronic shelf edge displays, e.g. live customer feedback scoring – blurring the divide between the online shopping experience and the in-store experience.
I have two main concerns. One is that while the retail price on the shelf label is being changed in under an hour, how does one change all of the price tags on the corresponding products in an hour? Secondly, who’s to stop the retailers from jacking up the retail of cold beverages, ice cream and fruit on a 90 degree day? Or firelogs, ice-melt and hot chocolate on a 10 degree day? The ability of a retailer to manipulate pricing at the expense of the customers so easily needs to have some accountability worked into the system.
On a recent tour of a grocery store in Asia I saw hundreds of ESLs. Does anyone know how well this is working there? What benefits are they seeing and what is their ROI? I don’t remember which grocer I was visiting, but as an earlier post pointed out, it isn’t hard to identify when someone is using one!
The store I work at has electronic pricing; it’s nothing new. Ours also use RF signals. The problem with these systems, and frankly why I hate them, is that they’re very high maintenance. Screens often crack, the tags fall on the floor and get lost/kicked around/broken, batteries quickly die and need replacement, various obstacles between the antennae and the tag (customers, in-aisle displays, freezer doors, etc.) can inhibit each tag from receiving the proper signal, thus causing price errors. Not to mention the time it takes to add tags to the system; about 45-60 seconds per tag between applying labels, scanning it in to activate it, waiting for the signal, and attaching it to the shelf. Also, the tags we have are known to stop working altogether. Between maintaining these and completing other price-related tasks, the electronic tags are not worth it in my opinion. It’s much quicker to apply stickers to the shelves. My store has had them for well over 10 years, and I’m kind of glad to see them go.
More Discussions
As Boomers ‘Age Out of Peak Purchasing,’ How Can National Brands Retain Interest With Gen Z?
According to a recent First Insight study titled “Is Gen Z Still Choosing Your Brand,” while…Is Supply Chain Volatility Here To Stay?
Can we expect an ongoing volatility to remain in terms of retail supply chain?Has Same-Day Delivery Become an Expectation Across Retail?
Are expectations around retail delivery speed in flux?
Simply put; All good if it works properly, accurately, and always.
I know there have been cost and performance challenges that have made ESL’s “not quite there yet” in the past, but I really think the biggest barrier is a process one, not a technology one. If you’re going to use ESL’s, that means you’d better have your planograms in order, and you’d better have store associates that understand and value accuracy in stocking shelves. Because quickly and automatically changing the price is meaningless if it’s not in the right place.
However, that said, I can’t see a future without ESL’s, to be perfectly honest. Price optimization is getting so sophisticated, and some of the things that retailers are trying to do with promotions and special offers, all mean that we can’t rely on manual, paper price tags, especially for grocery. An automated way to update pricing at the shelf is the “last mile” problem. So far, ESL’s are really the only way to solve it.
As noted by previous contributors, technology is great when it works. This article focuses on the high tech challenges of the system. While these issues are being addressed, we should not lose sight of the customer and the benefits the system offers to them. The product recall notification option is huge. Consumers still have a tendency to distrust food retailers when it comes to electronic pricing. Providing additional consumer benefits will go a long way to gaining customer acceptance.
We’re finally getting closer. Two to five years, IMHO. It’s an essential technology. But I remember covering this for Progressive Grocer 20 (yes, twenty) years ago. The earliest attempts stuck out quite a bit from the shelf, and were often bumped by shopping carts. Sometimes when that happened, they exploded, which caused some mild excitement in the aisles. And one company’s prototype worked fine in transmitting price changes from headquarters, but the way the radio transmissions were set up, every time one of the stores got its price changes, the big doors on the fire station next door kept going up and down for half an hour at a time. It took the fire department weeks to get that one figured out. And one of the tags for another prototype “reported in” every few hours to alert the system it was functioning, getting price changes, and all was well. But it went missing for two years (still reporting in) until it was found stuck to the bottom of a pallet in the back room somewhere. But yeah, I think we’re getting closer.
This is an idea who’s time simply must come. The technical challenges, while there, are more tactical than anything else.
This is a huge time drain on store personnel and inaccuracy here fosters multiple other issues of planogram compliance, inventory management and, certainly not least, customer satisfaction.
The big caveat is the same as for all things human when “replaced by technology”. Technology still requires a human to drive it, and humans still make errors — and nothing can multiply a human error faster than technology…
Since they were first introduced, ESL’s three main hurdles have been 1) Physical. Size of the tag has been reduced to workable dimensions with LCD technology. Installation and maintenance challenges appear to be addressed with the application of RFID technology. Cold case (hostile) environment survivability is not mentioned in the article.
2) Operational. See Nikki Baird’s comment about planogram compliance. This is big. 3) Financial. It always comes down to this. I’ve made dozens of ROI projections on ESLs. Based solely on the above description of these labels, I don’t see how any retailer could cost justify them without significant financial support. Is this hidden in the economic stimulus plan somewhere?
I’ve seen the tests for these signs and there’s another factor other than the benefits/challenges mentioned above… [they are not appealing] and NOT food centric.
Imagine standing in a beautiful produce area, alive with color and freshness (key factors as you enter a G store) and pinned in among the strawberries, melons and bananas are green-glow, 1980’s looking, digital signs for “1.99”. It’s distracting and not very easy to read to begin with, but most of all, it’s just plain ugly as it relates to the food.
There’s a delta there that still needs to be figured out, but for starters, for grocery, it should be ALL ABOUT THE FOOD, not about operations so that could be a place to start. How can we make these signs more ‘food centric’??? Is it color? Materials? Glow?? Let’s explore it from a food point of view.
This is a fascinating technology… over time, I have to imagine it will become the standard. The question is – how much time? – which has two elements: One, the technical, which others did a good job of addressing above. Two, the consumer: will all segments accept this now, or is it something they need to get used to? Testing is the right way to figure this out quickly.
Lee Peterson’s comment touches on a significant marketing issue: though small, the devices can obviously do more than convey price. Flashing a color to warn of a recall will not be nearly as regularly useful as flashing a “Top Seller” message on ONLY a few hundred items in the store. This alone could boost sales sufficiently to pay for the whole thing!
OK, I’m not a sharp pencil guy, but with something like 100 items generating 25% of total store sales, blinking those specific SKUs could feasibly deliver 10% lift on those specific items. So what’s a 2.5% total store sales lift worth?
The ability to have shelf-level data is the next evolutionary step from POS to understanding what’s happening in the store, and it provides a more tactical view. So if the challenges can be overcome, or managed, without creating a quagmire then merchandising and supply chain activities could be optimized to realize significant benefit. We’re seeing shelf-level intelligence becoming increasingly important to reduce out-of-stocks and back-room inventories. Retailers and CPG manufacturers, alike, will benefit from this information.
The Holy Grail of Supermarket Retail…An economical electronic shelf tag. The key word being “economical”. Since they did not reveal the price, there is no way to know whether Altierre has achieved the objective or not. I doubt it.
If we can all agree that the challenge with supermarket shelf tags is the price point, then it seems to me a solution that uses passive RFID and printed labels will come to fruition sooner than the active tag approach. Active tags might work for end displays and other promotion areas, but the vast number of center store items simply cannot justify the cost of a “permanent” electronic shelf tag.
Using RFID to manage in-store execution at supermarkets is going to occur before inventory management. One of the very big execution items is the implementation of price changes. Passive RFID can be a huge benefit, identifying items that are changing and detecting missed updates. Yes, store personnel still need to walk the store but it can be done with much more speed and errors can be detected and corrected.
Active shelf displays will come some day, just not yet.
Very glad to see news that the latest generation of ESLs is closing in on a practical cost/benefit ratio. This is a potential breakthrough use for RFID in stores – tiny location beacons within the physical space that other systems may interact with. I can visualize a smart shopping cart recognizing its proximity to a promoted item by detecting the ESL associated with that item. I can visualize a stock clerk triggering an item replenishment with a press of a button on his or her hand-held device.
But it’s not yet clear to me how retailers will ensure the right tags are consistently located in the right places and times, with the right merchandise in the proper stock levels. This seems to me to be less about technology than In-Store Implementation practice. What works well in the controlled lab environment may be difficult to roll out at scale in the absence of systematic, store-chaos-proofed technique.
Also I must add a critical comment about the referenced story: It irks me greatly that the participating retailers are not identified, which means the tech vendor is the source. If and when this test goes into actual stores, local brokers and merchandisers will spot it within moments of installation.
I’m reminded of the interestingly nouveau electronic digital shelf labeling systems of several years ago. Now gone. Do you remember that failed experiment?
From the description provided in this discussion, I didn’t see where shoppers see the price of an item at the shelf. Did I miss something, because I thought the shopper was the most important playah’ in this commercial equation?
There is no reason why ESLs couldn’t address age-old issues, like out-of-stocks and product information (recalls, etc.) today. They can show back room overstock, number of facings, when the next case is coming in, anything you want. They are managed better than traditional paper/plastic tags. They don’t have to be as ugly as they were 20 years ago. The installed price generates an ROI in less than twelve months when ordered in quantity, as proven by very robust ROI modeling. And little, tiny companies, like Carrefour have bought into their viability globally.
No, my company doesn’t sell ESLs, however we need to get past our prejudices of the past and leverage this technology. With few exceptions, we are managing our shelves and floors the same way we did 20 or more years ago. ESLs take the emotion out of so many aspects of the retail execution equation.
This technology is great, noted by many of my peers, but no one is identifying the tremendous cost consequences which are “glossed” over here and the largest issue, that of personal privacy. There are tremendous questions about tracking and identifying people’s movements (i.e. their product movements) in a store and when this stops. All RFID products also include some overage immediately outside of the store and personal privacy and security are some of the largest concerns relating to this.
Stores cannot be tracking and identifying what their customers do and where they go without explicit personal permission each time someone enters the store. There is also a large question about what will be done with all of this data once it has been acquired and how secure the storage will be. This system is a personal security nightmare, which is also why no stores were named in this article…Hmmmm…
A few thoughts on a subject. I spent many years watching in the UK whilst working for Tesco Stores Ltd :
1. LCD for me is not the right technology for shelf edge labels – E-Paper resolves issues of power consumption and reflection as well as appearing to be more like a paper label. With the rise of E-book readers the cost of this technology should start to fall.
2. In many retailers the ESL is now a source of a variety of data about the product intended for both the customer and store staff undertaking replenishment activities. The ROI will come from the combination of these activities not just price changes.
3. The vision we should perhaps be aiming for is not a shelf edge label but an electronic shelf edge strip removing the need to move labels and significantly reducing the effort in re-merchandising fixtures.
4. Multi-channel retailing presents other opportunities for electronic shelf edge displays, e.g. live customer feedback scoring – blurring the divide between the online shopping experience and the in-store experience.
I have two main concerns. One is that while the retail price on the shelf label is being changed in under an hour, how does one change all of the price tags on the corresponding products in an hour? Secondly, who’s to stop the retailers from jacking up the retail of cold beverages, ice cream and fruit on a 90 degree day? Or firelogs, ice-melt and hot chocolate on a 10 degree day? The ability of a retailer to manipulate pricing at the expense of the customers so easily needs to have some accountability worked into the system.
On a recent tour of a grocery store in Asia I saw hundreds of ESLs. Does anyone know how well this is working there? What benefits are they seeing and what is their ROI? I don’t remember which grocer I was visiting, but as an earlier post pointed out, it isn’t hard to identify when someone is using one!
The store I work at has electronic pricing; it’s nothing new. Ours also use RF signals. The problem with these systems, and frankly why I hate them, is that they’re very high maintenance. Screens often crack, the tags fall on the floor and get lost/kicked around/broken, batteries quickly die and need replacement, various obstacles between the antennae and the tag (customers, in-aisle displays, freezer doors, etc.) can inhibit each tag from receiving the proper signal, thus causing price errors. Not to mention the time it takes to add tags to the system; about 45-60 seconds per tag between applying labels, scanning it in to activate it, waiting for the signal, and attaching it to the shelf. Also, the tags we have are known to stop working altogether. Between maintaining these and completing other price-related tasks, the electronic tags are not worth it in my opinion. It’s much quicker to apply stickers to the shelves. My store has had them for well over 10 years, and I’m kind of glad to see them go.