Electronic shelf labels have been around for decades - have they finally arrived?

26 Nov 2014 6:18 PM -

Electronic shelf labels have been around for more than 20 years, first appearing in France in the 1980's. Whilst the benefits for ESL have always been clear and obvious, centring on labour savings and pricing accuracy, the road to mass adoption for retailers has been a gradual one. Why is this?
In part this has been due to the fact that the early incarnations of electronic labels were quite crude. They looked like the top of a calculator pinned to the shelf edge. Customer legibility was poor and importantly, with the old technology (called segment LCD) bar codes couldn't appear on the labels and so there was still a need for paper. In addition, the infrastructure needed to set up ESLs in the past was expensive and elaborate to install.
Whilst the commercial case for ESL has remained strong and getting stronger, new advances in the technology are seeing electronic labels close the gap on some of the old issues. Very light touch Radio Frequency technology has been developed by one of the leaders in the field, the British company ZBD Displays. This radio frequency technology (RF) doesn't suffer from the issues faced by its predecessors Infra-Red (IR) or Visible Light Technology (VLT). The latter two require significant equipment in store to work because they rely to a degree on line of sight with the shelf labels. Fully graphical LCD or e-paper displays can now display barcodes and brand logos and are significantly easier to read than the old segment LCD displays. This not only means that they meet the consumer requirements, but also that they can replace paper labels entirely. 
Adoption within retail around the world has been in pockets most notably in the Nordics, Middle East, and Europe. Adoption in the US has been slow. Technology improvements aside, there are still some fundamental conditions which have to be satisfied in order for the business case for ESL to be compelling. These conditions are about in store labour costs and about the amount of price activity in the market. Where labour costs are high and pricing volatile, the case is almost irresistible. Where labour is cheap and EDLP is common, the case is less compelling. This is at the heart of why ESL has been slow to take off in the US - a market with relatively low unskilled labour costs and relatively stable pricing. In Australia, labour costs are high and there is a high proportion of promoted products, which means Australian retailers are spending a great deal of money on price management.
Adoption of new technology has always been slow. When electronic scanning cash registers were introduced three decades ago there was tremendous resistance, from governments to unions. Now we wonder how we could have done without them. Now that the technology is robust and fit for purpose for electronic shelf labels, the moment has surely arrived for its widespread adoption in Australia.

Joe Blundell is a Director of Mirador, a leading company in technology solutions for retailers in Australia

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