by Editorial Team
March 07, 2019

Electronic shelf labels (ESLs) allow retailers to capture the same digital magic that has made e-commerce and m-commerce so successful, while also retaining the unique value that only physical stores can offer. Learn more about the five ways ESLs help brick-and-mortar retailers digitalize their business.

E-commerce is big, but stationary retail is still number 1, and for good reason

Globally, e-commerce retail sales will reach more than 3 trillion US dollars in 2019 according to Statista, and will continue their ascent to almost 5 trillion US dollars in 2021.

Although we’re seeing a surge in digital activity, it is true that many people still love the brick-and-mortar store – for example, as we found last year in a Wirecard survey, in-store shopping is still the number one shopping channel among US consumers, even for young people aged 18-24:

Perhaps it’s because many love the personal advice from friendly assistants; or the way you can touch, feel and sometimes even taste products before buying. Some love to meet up at the mall with friends and family, regarding shopping as a deeply social experience.

However, physical retailers certainly can’t afford to rest on their laurels. Traditional stores may lose ground to their faster-paced digital competitors, if they don’t adopt the same kinds of digital technologies.

And this is where the ESL comes in…

Unlike printed shelf labels, ESLs are digital interfaces that are linked to central servers, so that any price change or information update can be immediately pushed to an entire store, an entire chain of stores, or even an entire global network comprising a number of chains.

When customers are about to make a purchase, ESLs give customers certainty around pricing and provide richer information on the product to guide their purchasing decision. ESLs replace the printed versions of shelf labels, which retailers must continually update, replace, and painstakingly ensure are as accurate as possible.

But ESLs also go one step further. By integrating seamlessly and securely into payment platforms, they allow consumers to scan the label with their smartphone, add the item to their basket, and then ‘checkout’ and pay. All of this happens from the store aisle, meaning that the customer doesn’t have to physically stand in line and check out in-store.

This kind of frictionless, self-checkout experience was popularized by the likes of Amazon Go a few years ago. Today any retailer is able to embrace the digital future thanks to ESLs, with secure and instant self-checkouts that save busy consumers time, and encourage them to increase their basket size.

Let’s explore five ways that ESLs can enhance the experiences that physical retailers present to their customers:

1. Killing checkout lines and other customer frustrations

As we mentioned, ESLs that are woven into a retailer’s payments infrastructure enable customers to carry out self-checkouts. This is a powerful brand booster and creates faster, smoother experiences for customers (particularly for those quick ‘grab-and-go’ purchases).

It’s not just long checkout lines that cause frustration. As a retailer, you may have thousands or even tens of thousands of products lining the aisles. Keeping an up-to-date and accurate pricing on all items is a tough task. Customers often need help from overwhelmed support staff rushing from person to person.

Or, perhaps they decide against making a purchase if they’re not sure of the price. They may get to the checkout and realize that the price at the point-of-sale differs from that shown in the aisle, or maybe the price for that item is not in the system, and store clerks once again have to fix the problem.

Meanwhile, time is ticking, lines are building and customer frustration levels are rising.

Since ESLs draw pricing information from a single source, they’re always accurate. By scanning the label with their smartphone, customers can find a wealth of useful information such as product specs, features and benefits, warranty details, peer reviews, or even nutritional information for groceries. Video clips, demos and interactive guides can be presented via the ESL to further enhance the experience.

Suddenly, the physical retailer is able to provide the same rich detail that we’re used to in the e-commerce space, killing any frustrations and helping customers to make their purchases more confidently.

Scan and pay – and avoid checkout lines: this video shows the seamless customer journey ESLs can offer

2. Best-of-both: merging the digital and physical realms

This brings us to the next theme – merging the advantages of physical retailers with those of the digital realm.

ESLs enable retailers to build a clearer picture of customer habits – understanding where they are spending most of their time, which products and specials drew the best response, which were the products where customers needed more information, or where they abandoned their purchase. The insights are endless.

By integrating the ESL into a comprehensive digital solution across the entire store, interesting opportunities start popping up: to use iBeacon or near-field communications, for example, to guide customers to the product they’re looking for.

Retailers can harness the potential of an ‘endless aisle’, where those products that are not physically stocked on the shelves (or may perhaps be temporarily out-of-stock) can be presented via digital kiosks or on a customer’s smartphone. This ‘extends’ the physical store into a digital realm, allowing retailers to offer niche or specialty items, or even wider ranges of products, without having to increase theirstore space or hold more physical inventory.

Particularly bold retailers can also start tracking the digital e-commerce landscape in real time, and automatically re-price goods to match the best offer that’s available that day. In this way, they can offer powerful price guarantees, promising customers the very best prices on all items, augmented with the kind of service levels that only brick-and-mortar retailers can offer. This becomes an irresistible value proposition to shoppers.

3. Personalization, dynamic pricing, loyalty and more

In fact, dynamic price adjustment lies at the heart of what ESLs are all about. Imagine you have consumable inventory that needs to be sold (such as electric heaters on the shelves as wintertime ends, or fresh bananas that will be over-ripe the next day).

Using smart algorithms, retailers can dynamically adjust the prices of their items to maximize margins while ensuring that very little of their consumable inventory remains unsold. Aside from better stock management, ESLs enable you to offer customers targeted and personalized offers based on their scanning and purchasing history with those handy little labels.

Your loyalty and rewards programs can become far more compelling, and with increased digital capabilities, you’ll be able to attract the younger, more tech-savvy consumer that may be more inclined to shop online.

Retailers will have experiential stores that focus on those products where people favor offline purchases, with great service levels, infused with advanced digital tools, all operating in harmony with the retailer’s digital presence. #DigitalRetail #ElectronicShelfLabels

Some types of products (like electronics, books and movies) lend themselves to a purely digital mode of interaction; and certain sectors of retail have been reshaped by the digital wave: in many areas of Western Europe, for instance, high-street outlets selling mobile phones, accessories, and mobile data packages have been rendered all but obsolete by the convenience of direct digital channels.

The same Wirecard survey mentioned above also revealed that clothing and shoe purchases are rapidly migrating to digital channels, followed by toys and games.

There are other categories, however, where most people still prefer the high-touch physical retail experience – particularly in areas like food, fresh flowers, furniture, and health and beauty products.

A very interesting variant of ESLs for fashion houses are the so-called “Fashion Tags” which can be used instead of conventional article surveillance labels. They are attached directly to clothing and in addition to article surveillance, they offer customers the possibility to pay directly, receive further information via smartphone such as alternative colors and sizes or even to reserve a garment.

The fashion tag will be automatically unlocked after payment and then removed by an employee so that they can be reused as often as required – this is environmentally friendly, as the battery lasts up to five years. And customers who have already paid for the garment by mobile phone save a lot of time because they do not have to wait at the “normal” checkout line.

Tomorrow’s winning retailer won’t try to force customers to adopt any particular channel, but will rather assemble a line-up of products that suit each channel.

This is the true omnichannel vision in action: a hybrid between the pure-play digital retailer and the high-street chain. They’ll have experiential stores that focus on those products where people favor offline purchases, with great service levels, infused with advanced digital tools, all operating in harmony with the retailer’s digital presence.

5. Enhancing operational processes with digital platforms

ESLs certainly signal the end of printing thousands of paper-based labels. From a management perspective, they represent a step change in operational efficiency.

By storing data from ESLs, forward-looking retailers can start to unify a number of disparate data-points into a single format and structure. This could include data from the likes of loyalty programs, point-of-sale systems, surveillance cameras tracking footfall, and inventory management systems.

In addition, by combining data into a usable format, operations managers can spot opportunities to improve supply chains and aspects of the customer experience. They’re able to easily combine digital and physical capabilities, such as offering click-and-collect or home deliveries. And of course, they’ll continually optimize stock levels to best appeal to customer needs.

Payment at the shelf has never been easier - in-store customers just scan, add to their virtual shopping basket and scan their credit card - and can thus completely avoid cash lines! [(c) SES-imagotag Vusion Pay]

Payment at the shelf has never been easier – in-store customers just scan, add to their virtual shopping basket and scan their credit card – and can thus completely avoid cash lines! [(c) SES-imagotag Vusion Pay]

Conclusion: ESLs help retail establish a new approach

All this leads us to an important closing thought for retailers: it isn’t just about optimizing the existing store. It’s about establishing an entirely new approach to retail, one that’s resilient in the face of growing digitization.

With a digital platform supporting ESLs and other strategic digital tools, retailers can fuse their in-store structured data with the sprawling unstructured data available online. Here, we’re referring to the likes of social media, review sites, shopping websites, and other pop-culture tastemakers that define customer trends. These insights allow retailers to tap into today’s retail ‘zeitgeist’, and as they get to know what customers really want, they’re able to orchestrate experiences that blur the physical and the digital – capturing the inherent value of both channels.

If you want to learn more about how ESLs can help your store go digital, download our free whitepaper “Digitalization at the POS: How Electronic Shelf Labels are Going to Revolutionize the Shopping Experience”.