Will electronic shelf labels solve supermarkets’ pricing problems?

We asked the duopoly about their use of electronic shelf labels (ESLs). Used correctly, we think ESLs could be game changing for supermarkets looking to simplify their pricing.

What’s an ESL?

An ESL is a digital display or label, usually attached to a shelf. It can be used to display a variety of information, but in the supermarket context it can show price, unit price, specials, and barcodes. Depending on the tech, they can look almost like a calculator interface or even like paper in some cases.

Changes are automatic and tickets don’t have to be printed and placed manually. See “How does an ESL work?” for more details.

ESLs have been used for years in France where they’re in use in over 80% of French hypermarkets. The rest of the EU isn’t far behind with Germany embracing the technology.

Foodstuffs use of ESLs

Foodstuffs said 138 stores in the North Island have ESLs, and the tech is in every Foodstuffs South Island New World and Pak’nSave.

Foodstuffs declined to give us a list of stores in the North Island with ESLs but later confirmed the names of some of the stores without. Out of 330 stores in the North Island, 192 or about 58% don’t have ESLs.

We also asked if the Co-ops have plans for a 100% roll out. Foodstuffs explained that it was up to each store owner to install ESLs.

Countdowns use of ESLs

A Countdown spokesperson said there were ESLs in use at 55 Woolworths stores, with a set target of 2025 for 100% roll-out. We couldn’t get a list of which stores used ESLs from Countdown either.

The spokesperson said Countdown has commissioned an independent review of its in-store ticketing systems and processes.

Each Countdown store also has a dedicated pricing integrity team that helps make sure pricing is accurate.

“We remind all team members working in our stores of the importance of ensuring that our pricing tickets are accurate,” the spokesperson said.

Countdown agreed that ESLs could help remove human error in ticketing and make checking prices easier.

Ultimately, Countdown’s business structure meant it could implement ESLs countrywide without deferring to individual store owners.

The spokesperson said stores use the labels wherever it’s practical. That means on all shelves but not on pop-up aisle displays, for example.

We had the opportunity to visit two Countdown supermarkets, one with ESLs and one without. We saw a noticeable reduction in visual noise in the store using ESLs, and without the sea of callouts, numbers and colours, the price checking process seemed much less overwhelming.

How do ESLs work?

The ESLs at Foodstuffs use optical technology to automatically change and update pricing. The labels are battery powered, and each one communicates with a central system or database.

It means Foodstuffs can update pricing and promotions across every store immediately if necessary. It also means the prices are updated everywhere, not just on the labels, but the check-outs, online and on scales as well.

The system is separate in the South Island but has the same functionality.

The technology behind Countdown’s ESLs is similar to Foodstuffs, except it uses radio frequencies to communicate with the central systems as opposed to optical frequencies.

Countdown’s spokesperson said “our electronic shelf labels are connected to centralised pricing through a cloud-based solution that receives and transmits pricing updates made by our merchandise system from our central master data system.”

ESLs can also detect when a product is out of stock or has been moved from its original shelf location.

We think ESLs can simplify supermarket shopping

The duopoly has a long way to go in terms of quashing pricing discrepancies. ESLs have the potential to reduce confusing or misleading signage and make for a more straightforward shopping experience, but it all depends on how the major supermarkets decide to use the technology. We'll be keeping an eye on pricing transparency and accuracy in stores.