This story was originally published in Planet Retail's IT & Supply Chain newsletter on Thursday 28 November.

Proliferation of fully-graphical Electronic Shelf Labels (ESLs), Planet Retail predicted, would only be a matter of time. With the benefits of these tags being so numerous, our expectation was that, as soon as a few major players opted for widespread implementation, the ball would finally be set rolling with unstoppable momentum. However, two recent ESL roll-out decisions have prompted us to reassess this evaluation and take – once again – a very thorough look at what is driving retailers when it comes to investing in ESL.

The Rewe store in Bad Nauheim has been among the first to feature the group’s new ESL solution.

Only last week, Planet Retail reported on Tesco widening the roll-out of Samsung ESLs from Poland and Hungary to its home market of the UK. In Germany, Rewe Group has begun testing the same tags supplied by this relative newcomer in several supermarkets with a countrywide roll-out scheduled to start before the end of the year. What came as a surprise, however, was that both Rewe and Tesco opted to go for segment-based e-paper labels, instead of fully-graphical versions. In essence, they consciously opted for less flexibility, as with segment-based labels every tag needs to feature an additional paper label displaying the item’s barcode. Due to this, they cannot be automatically assigned to a new product.

Usually, retailers offset their ESL investments through reduced labour costs and the prospect of being able to make automated price changes. However, the most viable solutions for reducing costs are fully-graphical labels that are product-agnostic and can be automatically adapted to new shelf layouts when the assortment changes. Another advantage of the fully-graphical tags is their capacity to show various kinds of promotions - not only price reductions, but also buy-one-get-one-free or countdown promotions.

But even though Rewe Group and Tesco decided to go for the – comparatively inexpensive – segment-based tags, they can still reap significant benefits from the standard ESL features: quickly assigning new prices to products and thus saving on labour costs on the shop floor. They will also of course be able to enjoy the advantages of e-paper which – compared to LCD – offers better legibility.

Rewe Group and Tesco’s recent decisions illustrate that price remains a thorny issue for retailers when it comes to ESL investments. The businesses chose to overcome the problem by selecting segment-based tags costing approximately half as much as fully-graphical versions. Conversely, some other retailers such as Rewe’s Austrian sister company Billa took on the challenge by introducing electronic tags – albeit fully-graphical e-paper ESLs from Austrian novice Imagotag - but only across a very limited assortment: 400 products that fall under their price-matching Best Price Guarantee scheme.

With retail heavyweights such as Tesco and Rewe Group deciding to go for segment-based labels, the breakthrough for fully-graphical labels seems to have been postponed for a while yet. With no critical mass of sizeable retailers prepared to invest into the innovative fully graphical solution, the technology cannot quickly achieve desirable production scales and will remain comparatively expensive. The outcome of Rewe’s and Tesco’s ESL projects will be very important for the development of the market in the medium term, as any degree of success might spur other players to invest into segment-based ESLs as well.

However, in the long term it seems more than likely that eventually it will be the fully-graphical tags that prevail in the market due to their simply being the superior technology, especially when it comes to highlighting promotions. 

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