Electronic shelf labels (ESLs) can help improve long-term efficiency and effectiveness for retail businesses, which is why many large retailers, such as Walmart, have begun to adopt electronic labels. However, the initial implementation cost of electronic price tags is not low. For small retailers, are electronic labels worth it? Let's explore the costs and benefits of ESLs to help you determine whether they are the right choice for your retail business.
Initial costs and long-term savings
Before considering adopting ESL, you should evaluate the initial investment. Electronic shelf label costs are mainly concentrated in hardware costs, which vary depending on the number of labels, systems, and electronic shelf label manufacturer.
Then look at what ESL can bring
Labor savings
Manually changing price tags is very time-consuming and labor-intensive, especially in stores with frequent promotions. For areas with high labor prices, ESL can save a lot of labor costs
Reduce pricing errors
Manually changing labels is prone to errors, but with ESLs, you don't have to worry about this problem.
Paper and printing costs
Traditional paper price tags require constant printing, cutting and processing, which incurs recurring costs. ESL can save a lot of paper costs in the long run and has a positive impact on sustainability
Taking these factors into account, the return on investment (ROI) of ESL can be very considerable. Many retailers report that they see a return within 2-3 years, especially if they adjust prices frequently or manage large inventories.
Other benefits
Cost savings are not the only reason why electronic labels are widely adopted by retailers.
More accurate and uniform prices
Electronic shelf labels allow retailers to update accurate prices instantly, even between stores in multiple different regions. This is a good way to maintain price consistency.
Flexible price changes
Product prices can be adjusted by retailers in real time based on weather and inventory or other changes
Displays can also be customized for promotions.
Better shopping experience
With interactive features such as QR codes or NFC, customers can scan the labels themselves to get more information about the product, such as user reviews and inventory status. This gives customers more decision-making autonomy and enriches the shopping journey.
Electronic label innovation has not stopped, and there are still many functions of electronic labels that have not been demonstrated, such as smart navigation, etc.
Considerations
Transitioning from paper labels to ESLs requires time to train employees to operate a new system, integrate ESLs with inventory and POS systems, and manage data flows. This process may cause some disruption to daily operations. In addition, not all ESL systems are compatible with every retail environment or technology platform. If you have the ability, it is better to choose to develop your own system.
For large stores or stores with complex pricing strategies, more advanced ESLs with richer features may be more appropriate.
In the long run, electronic shelf labels will undoubtedly be a wise investment. However, each retailer should evaluate its own needs to determine whether ESL is right for its business.
