The dilemma of electronic labels

Discount Store News, Feb 23, 1998 by Jennifer Negley

At first blush, Connecticut's law requiring merchants to tag nearly every piece of merchandise they carry on their shelves seems the sort of arcane bureaucratic nonsense that unnecessarily bogs down the stocking process and ultimately adds undue costs to operations.

Certainly, Wal-Mart, Costco and Kmart must think so. Collectively, they have been fined more than $41,000 for violating state laws that require merchants to affix the retail price and unit price on most merchandise. The action came about after inspectors from the state's Consumer Protection Department conducted a series of unannounced inspections. The upshot: a total $28,300 fine for Wal-Mart, a $10,800 fine for Costco and a $2,550 fine for Kmart.

Connecticut has one of the strictest laws on the books regulating shelf pricing. Other states with similar regulations include California, Illinois, Massachusetts, Michigan, New York and Rhode Island.

The one exemption to the individual pricing rule in Connecticut is granted to retailers that use electronic shelf labeling.

Certainly ESL has been an innovative development for retailers on a number of fronts. One obvious benefit is the fact that it frees retailers from dedicating innumerable associate man-hours to manually labeling items. And most exciting for retailers, ESL gives companies the ability to program store-level adjustments on pricing to coincide with special promotions

For the customer, the key benefit of ESL is its greater pricing accuracy because pricing updates reach both the self and checkout counter simultaneously. But from the customer's point of view, you still have to wonder if this beautiful, technologically cutting-edge system will create the best of all possible worlds.

Let's face it, in the real world a shopping trip is one more chore crammed into a day filled with a series of other chores. And it's not uncommon for a shopper who has flicked a few impulse items into her cart to begin rethinking her purchases when she's gotten four aisles down the way.

Ask customers if they like pushing around a cart full of products that carry no price stickers that they can easily double-check and their answer will undoubtedly be a resounding "no." Frankly, I'm not certain that mounting scanners on the wall is an adequate substitute, particularly when consumers are clamoring for greater convenience in their shopping experience. My guess is most of them would say they prefer the Connecticut method of pricing.

ESL in unarguably a remarkable advancement for retailers. But the caution is this: if a strategy proves more convenient for the retailer than it does for the customer, it might not be the best choice.