Electronic or digital shelf labels (ESLs/DSLs) have had a fairly rough introduction to the American consumer. The food trade has generally found itself on the back foot, fending off the public’s fears of boogeymen like surveillance pricing.
Walmart’s John Furner took the bull by the horns last month and publicly pledged, in no uncertain terms, that that variety of sinister personalized pricing was out of the question in his massive U.S. operation.
It’s true that companies like Instacart — not a retailer — have been in hot water over allegations of “pricing discrepancies” between thee and me, but that’s a different story than ESLs entirely. Unfortunately, and despite hard evidence to the contrary, ESL technology and creepy, predatory surveillance pricing have become conflated in the public imagination.
Instead of labor savings, price accuracy or better store execution, much of the conversation has centered on what shoppers fear retailers could do with them: change prices constantly, raise them when demand spikes or — worst of all — use everything they know about individual customers to determine how much each one might be willing to pay. The nightmare scenario in the public imagination.
It’s certainly true that ESLs could enable and abet that kind of questionable practice. But show me a technology that cannot be abused and I’ll eat my hat. My family home is kept bright and comfortable by nuclear power — which could also wipe it off the map if misused.
Besides, this is an industry where word counts for a lot, and I’m willing to trust the word of folks like John Furner when they step up and say “not gonna happen” to ESL-enabled surveillance pricing.
But the trade still has an uphill battle on its hands to set the record straight.
I think upside is a great place to start. And as we’re beginning to see, this technology is already offering plenty of benefits to retailers and consumers alike. The best technologies have the potential to liberate us from drudgery and ESL tech has it in spades.
Look what’s happening — and about to happen — at Walmart.
Light (and Help) for the Chronically Lost
Here’s an awkward confession for a guy who writes about groceries for a living: I’m a pretty bad grocery shopper.
I get to the store with a list from my wife, move in… and promptly can’t find some important item on the list.
Here’s a typical text message chain:
Me: hey hey wheres the <whatever>
Her: over next to the <whichever>
Me, inevitably: lol uhhh wheres that?
And so it goes — often two or three times per trip. Like I said, I’m a bad shopper.
But it looks like ESLs are going to throw me (and my exasperated missus), a lifeline courtesy of Walmart and its new Shop to Light program. As far as I’m personally concerned, it’s light at the end of the tunnel. Professionally, I find it an intriguing idea with plenty of potential.
As has been reported, Walmart has already deployed digital shelf labels across more than 4,300 locations, with roughly 90% of store sections equipped. Walmart stores carry anywhere from 120,000 to 140,000 SKUs – a thought that fills the clueless shopper in me with dread. I suspect I’m in good company with anyone else who’s ever stood in an aisle looking for that one particular flavor, size or variety among a wall of nearly identical packages.
Shop to Light connects Walmart’s app to the electronic label on the shelf. Search for a product, get to the appropriate aisle and the LED built into that product’s shelf label flashes.
It’s remarkably simple… yet from where I’m standing, totally amazing.
It seems it’s already working well. Walmart says shoppers have already generated something like 5 million Shop to Light flashes since the feature began rolling out on a limited basis this summer.
And that’s only the shopper-facing use.
Walmart’s Pick to Light uses the same LEDs to help associates locate the exact products needed for pickup and delivery orders. Stock to Light helps associates determine exactly where merchandise belongs during replenishment. All three functions are being pushed companywide ahead of the holiday season.
Now we’re talking about something much bigger than replacing a paper price tag.
Think about the problems that one teensy little shelf-edge device can touch: pricing accuracy, replenishment, ecommerce picking, inventory management, shopper navigation and labor productivity.
And here, I think, is where Walmart’s experience could be a lesson for the entire industy
Stop Selling ESLs as Price Tags
The industry has spent too much time explaining electronic shelf labels in terms of what they replace: paper tags, labor hours, manual price changes.
Those are perfectly legitimate benefits, but they also frame the technology almost entirely around price… at a time when price sensitivity has never been higher. And then we grimace when consumers hear “digital price tag” and immediately start wondering what new things retailers might do to prices.
Walmart’s emerging use cases suggest a much better description: store infrastructure. It’s the LED lighting, it’s automatic doors.
The shelf label can become a digital endpoint connecting a physical product to pricing systems, inventory, associates, ecommerce operations and the shopper’s phone. The price displayed on the ESL is really only one function in the proverbial grand scheme of things.
I think that infrastructure argument ought to become the center of the industry’s message.
Say What You Won’t Do
It’s tough to overstate the impact of John Furner’s statement and Walmart’s overall approach; he was refreshingly frank and very specific. We’d do well to take a page from that playbook.
“We would never misuse this technology” is a little vague. Nobody quite knows what that means.
“We price the product, not the person” means something; it resonates. It passes the bumper-sticker test.
Walmart has gone further, saying it will not use a customer’s income, shopping history or perceived willingness to pay to determine that individual’s price. The company also says its digital shelf labels contain no cameras or microphones, don’t collect customer information and don’t independently determine prices. Approved price changes are centrally controlled and typically made outside shopping hours.
Those are concrete claims consumers can understand – and hold Walmart accountable for.
Other retailers deploying ESLs should be willing to make equally concrete promises:
If you don’t use personalized pricing, say so.
If the shelf labels don’t collect shopper data, tell ‘em.
If you won’t raise prices in response to momentary demand spikes, be upfront.
If price changes require centralized authorization, put it in black and white.
And then put those promises somewhere consumers can actually find them.
The trade isn’t going to win this argument by telling shoppers they’re foolish for being suspicious. Given the amount of personal information consumers already surrender to apps, loyalty programs and online platforms, some of that suspicion is entirely rational.
Sunshine, as they say, is the best disinfectant. The answer is transparency.
Show, Don’t Explain
The other mistake would be trying to PR our way out of this with a 900-word FAQ explaining how ESL technology works.
Shop to Light, on the other hand… you can see that work and experience the benefits yourself. My wife is keen for me to try it out on my next trip. That little flashing LED probably does more to rehabilitate the image of electronic shelf labels than a hundred corporate statements.
I search for the obscure brand of salad dressing my wife put on the list. A light flashes. I find it.
An associate picking an ecommerce order gets directed to the correct SKU. A light flashes, and the order gets picked faster. A stocker carrying a case into an aisle immediately sees where it belongs. A light flashes… and so on.
Suddenly the technology – and the entire conversation around it – no longer centers on changing the price of Cheerios at 3:47 p.m. on a Tuesday.
Besides, “This store just plain works better for everyone” is a much easier story to tell.
The Industry Needs to Change the Subject
None of this means lawmakers should ignore personalized pricing. Quite the contrary. Consumers should absolutely hold retailers to their promises, and policymakers have every reason to establish clear rules governing how personal data can — and cannot — be used in pricing.
But, as has been said, regulating surveillance pricing and regulating electronic shelf labels are two very different things. The food trade needs to start making that distinction itself rather than waiting for consumers, journalists and legislators to make it for us.
And there’s a pretty straightforward communications strategy sitting right in front of the industry:
Separate the technology from surveillance pricing. Make specific promises about what you won’t do. Stop leading with labor savings. Demonstrate benefits shoppers can actually see. And describe ESLs for what they’re becoming — digital store infrastructure.
Walmart’s Shop to Light program and the communications around it provide an unusually good demonstration of how to do that.
ESLs arrived in the public consciousness as electronic price tags, and, by turns, the debate turned into one about what retailers might someday do to prices. It’s time to change that story.