Martina Morawietz


Greater margins and customer retention in the retail segment: Five arguments in favor of digital price tags

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The retail segment is changing: Nowadays, customers are able to compare prices at the touch of a button. Either on their home PC or in store using their smartphone. The internet is both a curse and a blessing. But if the strategy is right, the retailers can keep pace with the high-growth online retail segment (in German): They can flexibly change their prices. They can quickly grant special discounts. They can personally advise the customer and offer additional services. And, in doing so, they can convince the customer to make a purchase. The digital price tag helps retailers to achieve this. 

Overcoats in different colors.

In order to successfully win over customers, stores need to update their technology and offer a unique experience.

Prices are dynamic – and accepted by the customer

If I get caught in a sudden downpour when I am in a city’s pedestrian zone, an umbrella can easily cost 5 euros more than it does in summer. In December, a calendar may cost 10 euros whereas it may only cost half of this in January. Customers are aware of these fluctuating prices for the same product and accept such price dynamics. This primarily applies to seasonal goods and slow-selling products. Changes at certain times of the day and in online shops are also considered normal. These results came from a representative survey (in German) of 1,000 German consumers on behalf of PricewaterhouseCoopers (PwC). 

What makes retailers change prices? Discounts increase revenue and get new customers into their stores. Furthermore, they also make space for new collections. The top priority is to not appear more expensive than the competition. And the aim is to keep pace with online retailers. Of course, retailers hope that price rises at short notice will also result in greater profits. The margins are often low in the retail segment.

Changing prices in real time with digital price tags

Digital price tags make the task of manually changing standard price tags superfluous. Changes can be made at the touch of a button. Electronic shelf labels (ESL, digital price tags) are the new strategic tool when it comes to flexibility in the retail trade, pioneering new business models. By 2025, the global market for digital price tags is expected to grow by 17 percent each year. This estimate was made by the experts of a current Gartner study. Five facts that retailers should take into account before investing in this technology: 

  1. More efficient processes: Laborious manual work is no longer required
    Once a discount promotion has ended, all price tags need to be replaced before the store opens again. For large retail chains, this represents an enormous logistical effort for manual tasks that are prone to errors. With digital price tags, one employee from the Marketing department can change all price tags centrally. In real time and in all stores. This reduces staff costs and eliminates problems at the cash register in the event of incorrectly priced goods.
  2. Customers love unique shopping experiences
    Retailers who do not have to spend time switching price tags have more time for their customers. They can utilize the strengths of the brick-and-mortar stores: The customer gets personal assistance. They can touch the product and take a look at different versions. Maybe there is another product in store such as the top that matches the skirt. Thanks to the digital location function offered by the digital price tag, it is even possible to find the sweater that an undecided customer carefully hid among the pile of trousers.
  3. The best of both worlds
    Customers have become more demanding: Online shoppers appreciate the range and depth of information available on the internet: Care information for the sweater, ratings, or instructions. This information can be stored on QR codes on the digital price tags. Retailers are able to take a look at stocks or availability in other stores. Customers can reserve their desired product. They can order their product in other colors to their desired store or arrange for it to be delivered to the customer’s home. Bricks-and-mortar stores are becoming interactive and offer the same information as the internet, but only they can offer unique personal customer service. With their digital identity, retailers are able to boost their image: Customer wishes are fulfilled here. And not only today, but tomorrow as well. This is smart retail.
  4. Want more? New business models increase customer retention
    Various technologies can be linked together in digital stores. Customers who use the retailer’s app can pay for their goods much easier: The customer pays using the digital price tag. This means that they do not have to wait in line at the cash register. A digital version of the receipt is saved on the customer’s phone. Depending on what the customer has purchased, they will receive a discount code for their next purchase in the app. Not only that, points are added to their customer bonus scheme. Many customers look for products on the internet and order them online. Thanks to the digital location function, shop assistants quickly find the product in the store. Customers can then collect them during their lunch break or on their way home using the “click & collect” option. The digital price tag is paving the way for such connected offers. Incidentally, studies show that customers who utilize the “click & collect” option spend more on average than if they were to solely make their purchases in store or online.
  5. The investment pays off in the end
    Of course, technical updates cost money. Introducing such technology ties up resources – often the busy manager. But, as the saying goes, first impressions count: The digital price tag’s sheer presence on the edge of the shelf inspires the customer to make a purchase. This is priceless and works without an employee having to take action.

    The tag pays for itself quickly: Automation reduces process costs. Retailers have more time to advise customers which increases revenue. Inventories are carried out automatically by linking the tag to the enterprise resource planning system. Warehousing becomes more streamlined as a result. Not to mention the opportunities to increase profit through dynamic pricing. 36 percent of retailers already use electronic price tags. A further nine percent want to use this technology soon. This was presented in the “IT Trends in Retail 2019” study undertaken by the EHI Retail Institute (in German).

And finally: A little bit of technical jargon

Digital price tags can be attached to the goods. Retailers can also position them on the shelf. The tags are powered by a button cell battery. The battery charge is sufficient for around 500 price changes. An independent wireless network controls the tags. This is securely connected to the cloud via LAN. From there, it connects to the enterprise resource planning systems. Retailers can ensure the brick-and-mortar stores and the web shop are consistent, thus making sure that they please the customers across all sales channels and gain loyal customers.


Smart retail

Digitization will ensure the future success of retail.