DIGITAL technology is rapidly transforming the retail landscape, and one of those innovations is the rise of digital tags.
These electronic displays are set to redefine the shopping experience, offering retailers a tool to engage customers more effectively – but shoppers may want to know if they do more harm than good.
By 2026, Walmart plans to equip its 2,300 stores with digital shelf label (DSL) technology that allows employees to update product price tags in just minutes.
This technology is believed to significantly reduce the time it currently takes to perform this task from 48 hours to mere minutes.
The move aligns Walmart with other retailers like Whole Foods, Kohl’s, and Kroger, which have also adopted electronic labels that can be adjusted remotely.
Proponents of this technology believe it will lead to more consistent pricing and improved customer service while saving labor costs.
However, the shift to dynamic pricing raises concerns among some lawmakers and consumers, who fear it could lead to surge pricing during peak demand times.
KEEP THEM COMING
Walmart isn’t alone in this transition; Kroger began testing DSL technology in 2018, and Kohl’s has been using it since 2015.
Meanwhile, Schnucks, a Midwest grocery chain, has also implemented a digital pricing system, and such technology is already commonplace in Europe.
A recent survey shared by Forbes found that 52% of US consumers associate this pricing strategy with price gouging, while 34% view it as beneficial.
While the primary aim of digital shelf labels is to enhance operational efficiency — allowing associates to change prices every 10 seconds — customers should remain vigilant as retailers navigate the balance between innovation and fair pricing, per the outlet.
Ultimately, the success of DSL technology will depend on how well retailers address consumer concerns and adapt to the new landscape of pricing strategies.
DIGITAL TAG TIRADE
In an exclusive interview with The U.S. Sun, Sean Turner, co-founder and chief innovation officer of Swiftly, a leader in retail technology, shared his insights on the significance of digital tags.
Turner explained that these displays can be quickly updated with relevant information, such as promotions, product details, or usage instructions.
“This not only educates shoppers but also streamlines store operations by eliminating the manual labor associated with traditional paper signage,” Turner noted.
When it comes to the return on investment, Turner advises retailers to conduct a thorough cost-benefit analysis.
Eleven questions for Kroger
Senators Elizabeth Warren and Bob Casey asked the CEO of Kroger to answer eleven questions about AI, labels, and Microsoft’s EDGE technology:
- How many Kroger grocery stores currently use EDGE or other ESL platforms?
- How many customers are served by these stores?
- Did any external entities advise Kroger to adopt EDGE and/or continue using EDGE?
- If yes, who are those external entities?
- Has Kroger prepared internal estimates regarding the potential to increase prices or profit margins by adopting dynamic pricing with EDGE?
- How does Kroger establish dynamic prices using the EDGE system?
- What factors does Kroger consider when changing prices? Please include a description of any time- or volume-based considerations.
- How does Kroger inform customers of recent or upcoming price changes?
- How far in advance does Kroger inform customers of price increases that will be implemented using the EDGE system?
- For all items that have been subject to dynamic pricing using EDGE, what is the average percentage change in price of those items over the first six months of using the system?
- For what percentage of items has the price increased over the first six months of using the system?
- Has Kroger ever used EDGE to change the price of an item more than one time within the same day?
- If not, does Kroger intend to do so in the future?
- If yes, please list:
- The locations at which Kroger has changed the price of an item more than once in a day.
- The complete list of products for which Kroger has changed the price more than once in a day.
- Will Kroger use customers’ data to institute personalized pricing on its ESL platforms?
- Will customers have the option to opt out of the collection of personal data through ESL platforms?
- What safeguards has Kroger put in place to protect against violations of consumer privacy related to ESL platforms?
- How will Kroger ensure that it will not use customer data related to ESL platforms to discriminate based on protected classes, such as race, gender, or age, when offering personalized prices?
The senators requested that Kroger answer these questions by August 20.
Source: Letter from Sens. Warren and Casey
“Whether digital tags are a smart investment is dependent on the retailer. Retailers need to do their own math and determine the cost of labor spent manually replacing price tags against the capital investment of implementing digital tags,” he said.
However, he added that the advantages extend beyond mere cost savings.
“If you can effectively use digital tags to advertise digital coupons in your mobile app, there may be other benefits in addition to just the labor savings.”
TOUGH CALLS
Despite their benefits, Turner acknowledged the hurdles retailers face when adopting digital tags.
“The initial investment in the technology can be significant,” he noted, adding that additional costs may arise from installing power outlets at shelf locations.
To ensure success, he recommends integrating digital tags into a broader retail media strategy to optimize both revenue growth and cost savings.
THOSE THAT BENEFIT
Turner highlighted that digital tags are particularly advantageous for retailers in high-labor cost environments.
“These tags serve as another powerful tool for effective communication with shoppers,” he said.
“Retailers can deliver targeted messages and personalized recommendations tailored to their specific audience.”
This tailored approach helps retailers connect more meaningfully with customers, especially in a competitive landscape.
Looking ahead, Turner predicts that digital tags will become increasingly vital as labor costs rise.
“Their ability to automate price updates and deliver targeted messages will make them a valuable tool for retailers seeking to improve efficiency and enhance the customer experience,” he explained.
CONSUMER SPENDING TRENDS
In terms of current consumer behavior, Turner observed a notable shift.
“Despite economic fluctuations, grocery prices remain a significant burden for consumers,” he said, noting a rise in couponing and deal-seeking behavior.
“Consumers are increasingly using technology to find the best deals.”
He pointed out the growing trend of personalized promotions tailored to shoppers’ preferences, emphasizing that these strategies provide targeted savings opportunities.
“Creating targeted deals and promotions to resonate with digitally native customers is essential,” he stated.
Retailers can foster loyalty and increase in-store visits by offering personalized in-app and online promotions.
Consumers are increasingly using technology to find the best deals.
Sean Turner
GOLDEN LOYALTY
Looking toward the future, Turner believes that while large chains and mergers dominate headlines, local grocery stores will maintain their loyalty among consumers.
“People will continue to remain loyal to their local grocery stores over the next few years,” he said, highlighting the enduring value of the in-store experience.
The tactile interaction with products, discovery of new items, and social aspects of shopping cannot be easily replicated online, ensuring that local grocers will remain pivotal in the retail landscape.
