The rise of electronic shelf labels in retail

Electronic shelf labels are transforming the retail industry by offering a more efficient, dynamic way to manage pricing and product information. As retailers seek to improve the in-store shopping experience and streamline operations, digital devices are an increasingly important part of connected stores. With the growing demand for automation and digital solutions, the ESL market is expanding, with many retailers testing the benefits of digital shelf label solutions.

An electronic shelf label (ESL) is a digital display that can show information about the item, e.g. product details, prices, special offers and promotions, or stock levels. ESLs can be connected to the shop network via Bluetooth or other wireless connection technologies and exchange information with the ERP system or other store applications.

Electronic shelf labels have long done more than just display the prices like their paper predecessors: ESLs are becoming more advanced, offering features like Near Field Communication (NFC) and QR codes. This allows customers and employees to get more information about products by simply placing their mobile devices near the label. Additionally, some ESLs enable proximity-based marketing offers tailored to a customer's preferences and location within the store. A notable example is Kroger’s EDGE ESLs, which can read a customer’s shopping list from their mobile device and light up the corresponding shelf label to make item selection easier. Modern ESLs also boast enhanced graphic capabilities, providing clearer, more visually appealing displays for both products and promotional content.

The global electronic shelf label market is estimated to reach a valuation of $1.4 billion in 2024, according to an industry report by Fact.MR. The market is projected to grow at a compound annual growth rate of 18.3% from 2024 to 2034. The growing adoption of ESLs worldwide is being fueled by increasing automation trends in the retail sector, particularly in price optimization and omnichannel marketing.

• ESLs enable real-time automated pricing and updates while reducing errors.
• Modern ESLs offer additional information for a better customer experience like nutrition, origin, sustainable production, stock levels, or promotions.
• ESLs with NFC tags enable seamless self-checkout
• ESLs provide valuable data and insights into store traffic and product placement for optimizing sales.
• Inventory management can be optimized using ESLs by tracking inventory in real time and guide customers to online options if a product is out of stock.
• Retailers can use ESLs light up product locations. This speeds up order picking and restocking
• ESLs can promote sustainability by cutting down on the use of paper and ink. This is particularly true if the energy for operation is obtained from renewable sources such as solar energy.

The numerous possible applications and advantages of ESL have led to numerous retail chains announcing in recent months that they will be equipping their store networks with digital shelf labels.

In June, Walmart US announced to expand digital shelf labels to 2,300 stores by 2026. According to Walmart, their stores stock over 120,000 products for which the employees have to manage thousands of weekly pricing updates for new items, rollbacks, and markdowns. Using ESL, Walmart can now update prices directly at the shelf via a mobile app. This technology increases productivity, allowing price updates that once took two days to be completed in minutes. An additional feature helps streamline stock replenishment or order picking by signaling the right shelf locations needing attention.

SPAR Austria, too, recently announced the launch of multicolor smart electronic shelf labels across the country, following an extensive testing phase. The colorful displays offer customers a modern and convenient shopping experience. By the end of the year, 200 SPAR stores are supposed to be equipped with ESLs. The four-color ESLs provide customers with accurate price, promotional, and product information.

There are many opportunities for retailers to use ESL to make work processes more efficient, adjust prices more quickly or improve customer services and shift them to digital. However, a recent criticism of ESL use by the Kroger retail chain from two US senators shows that retailers should proceed with caution. The senators fear that large food corporations could abuse their market power and suddenly drive up prices for food products that are in demand. They also see the privacy and data sovereignty of consumers at risk, as Kroger, in collaboration with Microsoft, is planning to install cameras on shelf displays to collect information about customers, including gender and age. With all the increasing networking options and data analyses available to market participants, consumers are becoming increasingly sensitive to fair prices and the handling of their customers' personal data.

Sources: Abi Research blog post, press release Fact.MR, press release SPAR, press release Walmart, Future Stores blog post