Buying groceries in the US could soon require gazing at far more digital screens. Price tags, which are normally printed out individually for items using paper and ink, are slowly being replaced by digital displays that grocers say will increase productivity and potentially lower prices for consumers.
Walmart, the nation’s leading grocer by sales, recently announced plans to expand these “digital shelf labels” to 2,300 of its stores nationwide by 2026, which could expose millions of consumers to the technology. It will also introduce dynamic pricing–a concept usually tied to ride share apps like Uber–to the old-school practice of buying bananas and milk.
How do digital shelf labels work?
Digital shelf labels—or electronic shelf labels (ESL)—are digital price tags that can be remotely adjusted. Though these digital tags have become relatively common staples in grocery throughout Europe, they’ve only started to gain traction in the US towards the end of the 2010s. Though ESLs can vary by make and manufacturer, they are generally small, battery powered e-paper screens that can wirelessly communicate with a remote server through a local internet network. In Walmart’s case, the employees can access and adjust the screen via a centralized mobile app.
In coming years, grocery store patrons will likely interact with ESLs much in the same way they do with traditional paper tags. The ESL shows a brief description of the product along with its price. These smart tags go a step further, however, by including QR codes which customers can scan with their phones. Consumers are then directed to a page with additional information about an item, like its provenance and nutritional information or price per weight. That additional context could empower shoppers to make more informed purchasing choices.
Grocers like Walmart are optimistic ESLs will improve their overall productivity and efficiency. Prior to ESL, store associates would have manually changed out price tags weekly to reflect changing prices or new markdowns. Walmart stores typically house around 120,000 products in their massive facilities, so all those manual price adjustments can quickly add up. Now, employers will be able to use a mobile app to quickly change prices on the fly. ESL offers the opportunity to alter the prices of thousands of items at once. Prices on individual items, according to NPR, can fluctuate as much as six times per hour when ESLs are in place.
“A price change that used to take an associate two days to update now takes only minutes with the new DSL system,” Texas-based Food & Consumable Team Lead, Hurst, Texas Daniela Boscan, Walmart Food & Consumable Team Lead Daniela Boscan said in a blog post. “This efficiency means we can spend more time assisting customers and less time on repetitive tasks.”
Associates working at the store can also flash lights from the ESL in order to quickly alter a human worker to a shelf or area that requires physical attention. In Walmart’s case, workers gathering items for deliveries can also quickly locate and find items with ESLs via their mobile app. Gone are the days, hopefully, of frustratingly weaving back and forth between aisles desperately searching for the spice section. The shift to digital shelves could also help improve The digitized pricing system will also give companies more control over adjusting prices for items nearing their expectation date which, in theory, could lead to less food waste.
But the potential appeal of ESL isn’t just limited to marginal productivity gains. The ability to change prices on a fly means grocery stores using the tech could also reduce Uber-style surge pricing. With that model in mind, grocery stores could have an incentive to up prices for water or ice during hot days or warmer items during the winter. They could also raise prices of products verbally during peak shopping hours or during holiday seasons where consumers are more likely to rack up lengthy grocery bills. An ESL, for example, would let grocers incrementally adjust the prices of a turkey in the days or hours leading up to Thanksgiving. ESLs could also help store markdown or discount items that are approaching their expiration date. That could lead to better deals for shoppers and potentially prevent a store from throwing out an expired item.
“This represents a significant shift in how I, and other store associates, manage pricing, inventory, order fulfillment and customer interactions, ensuring our customers enjoy an even better shopping experience,” Boscan added.
Which grocery stores are using these labels?
Walmart isn’t the first US grocery to trial ESL. Kroger, Ahold Delhaize, midwestern chain Schnucks, and Amazon owned Whole Foods have all experimented with ESLs in some form for multiple years. While Walmart might not be first to the trend, its entrance is significant due to its sheer size. Last year, Walmart made up 23.6% of all US grocery sales. That makes it the largest grocer by sales in the courtney. Following the successful trial of ESL in a location outside Dallas, Walmart says it now plans to expand the pricing practice to 2,300 stores by 2025. That means millions of US grocery consumers could interact with digital pricing systems in the near future.
There’s signs ESL could become the new norm. A recent market study conducted by the firm Incisiv on behalf of Verizon estimates more 26% of grocers and general merchandisers possessed the capability to use ESL in 2023. At the same time, small, independent grocers may lag behind larger corporate players due in part to new hardware and software requirements needed to power so-called “smart shelves.”
ESL are part of a larger trend to bring dynamic pricing to everyday consumer good
Dynamic or surge pricing is quickly expanding and applying to more everyday consumer goods. Though most only commonly associated with rideshare apps like Uber or Lyft, dynamic pricing has also become a staple in airline ticketing and even live music and event sales. Consumers critical of dynamic pricing argue these practices have led to unjustifiably price tags and seemingly impossible to obtain concert tickets. Fast food giant Wendy recently sparked a brief online controversy of its own after it announced its dynamic pricing trial. Wendy’s tried to backtrack by saying its price changes wouldn’t amount to “surge pricing” and would actually save consumers money on select items during non-peak hours.
It’s unclear if US grocery shoppers will embrace digital price tags and potential dynamic prices willingly. American consumers repeatedly cite high grocery prices as one of their primary financial concerns, especially following inflation related price increases at grocery stores in recent years. Frustrations around grocery prices reached a boiling point earlier this year and led President Biden to publicly urge grocery chains to lower prices to match lessening inflation. In theory, ESLs could help achieve that goal by helping grocery chains more efficiently manage their inventory and offer discounts for items nearing their shelf life. Whether or not businesses actually use ESLs to benefit end consumers as opposed to their own bottom like, however, still largely remains to be seen.
