Pricing Done Right ... ESL Link
khimetrics.com
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What could help the ROI for price optimization is the linkage between software and electronic shelf labels (ESLs), small plastic modules that flash shelf prices for each SKU in lieu of paper labels. ESLs, which have been marketed to grocery chains for more than a decade with mixed results, enable grocers to execute pricing changes instantly across the store, simultaneous with changes at the POS, ensuring consistency between the shelf and the checkout.
Though ESLs have been touted for their ability to cut labor and paper label costs (see sidebar), the labels have had their own cost justification problems. The price of NCR shelf labels, fully installed, has dropped, and is now between $5.50 and $6.50 per label, which is multiplied by thousands of labels per store.
But marketers of both ESLs and price optimization systems say that, working together, the two technologies enhance each other's value and ROI. ESLs effectively facilitate execution of the many price changes called for by the software. Manning says that a U.K. retailer is currently testing just that proposition. ESLs would also extend the ability of retailers to change prices, notes Manning. "You could have time-of-day pricing, promotional cycles throughout the store or tie-in loyalty cards. It would be a whole new world of price segmentation."
One retailer testing price optimization says that because his chain is not changing any more prices with the system than before, he considers ESLs too costly. But the potential of the ESL-price optimization linkage is becoming noticed elsewhere. NCR is working with 10 chains on ESL pilots where KhiMetrics is also being evaluated, says Peter Bartolotta, vice president and general manager for RealPrice, NCR's ESL product line. KhiMetrics has been working directly with IBM, which markets Telepanel price labels.
Bartolotta points out that because both ESLs and price optimization are expensive, retailers may prefer to choose one or the other. What's needed, he says, is a CEO who finds the capital for both technologies because they can "cause a fundamental change in the business." Instead of investing in three new stores, they could consider investing in technology that can impact the profitability of "the other 850 stores," he says.
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So much for our KhiMetrics connection. With the recent Big Y trial we've got a Big ONE and the other guys already have TEN.
The Telepanel Shuffle continues ... We get great intentions and the others guys get orders. Over the last 4 years, the only thing one can say about Telepanel is that their execution has appeared to be totally inept. It's very sad that their technology has failed to take hold over and over and over. |
