An employee adjusts a digital price for vegetables at the Whole Foods store in the Silver Lake neighborhood of Los Angeles.
Patrick T. Fallon/Bloomberg via Getty Images
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Patrick T. Fallon/Bloomberg via Getty Images
Grocery store prices are changing faster than ever before—literally. This month, Walmart became the latest retailer to announce it will replace price stickers in its aisles with electronic shelf tags. The new tags allow employees to change prices as often as every ten seconds.
“If it’s hot outside, we can raise the price of water and ice cream. If there’s something that’s close to the expiration date, we can lower the price — that’s the good news,” said Phil Lempert, a food industry analyst.
Apps like Uber already use surge pricing, in which higher demand leads to higher prices in real time. Companies across industries have sparked controversy with discussions about implementing price increases, with fast-food restaurant Wendy’s making headlines most recently. Electronic shelf tags allow the same strategy to be applied to grocery stores, but they’re not the only reason retailers can make the switch.
The ability to easily change prices was not mentioned in Walmart’s announcement that 2,300 stores will have digitized shelf labels by 2026. Daniela Boscan, who participated in Walmart’s pilot of the labels in Texas, said the main benefits of tagline are “increased productivity and reduced walk time”, plus faster shelf replenishment.
Walmart isn’t the first major grocer to make the switch, as you can already find electronic shelf tags at Whole Foods, Amazon Fresh stores and Midwestern chain Schnucks. Digitized shelf labels are even more common in stores across Europe.
Another feature of electronic shelf labels is their product descriptions. Lempert notes that the barcodes on the new labels can provide useful details in addition to price.
“They can actually be used where you take your mobile device and scan it and it can give you more information about the product – if it’s the source of the product, if it’s gluten-free, if it’s keto-friendly. That’s really the promise of what these shelf labels can do,” Lempert said.
While higher wages make work more expensive, retailers large and small can benefit from the increased productivity that digitized shelf labels enable, said Santiago Gallino, a professor specializing in retail management at the Wharton School. of the University of Pennsylvania.
“The bottom line, at least when I talk to retailers, is calculating how much work they’re going to save by including this. And in that sense, I don’t think this is something that only large corporations like Walmart or Target can benefit from,” Gallino said. “I think smaller chains can also see the potential benefit from it.”
While tags give retailers the ability to suddenly raise prices, Gallino doubts companies like Walmart will take advantage of the technology in that way.
“To be honest, I don’t think that’s the main driver of this,” Gallino said. “These are companies that tend to have a long-term relationship with their customers and I think the risk of disappointing them can be very dangerous, so I would be surprised if they try to do that.”
Rather than seeing an opportunity to take advantage of rising prices, Gallino says retailers are likely to pull back from electronic shelf tags to ensure consistency between online and in-store prices.
“Today, Walmart customers can check their app once they’re in the store, the prices that Walmart offers online,” he said. “And if there is inconsistency, it can lead to frustration or make customers confused.”
Electronic shelf tags should make it much easier for brick-and-mortar stores to keep pace with prices as they change online. And, he says, that consistency should be better for customers.