By Alan Wolf
It’s no secret that the advent of the Internet, e-commerce and digital marketing has revolutionized retail. Business is now conducted literally at the speed of light, giving a home-field advantage to online-only merchants like Amazon.
One of the most valuable assets in Amazon’s digital toolbox is dynamic pricing, which allows it to change retails on the fly in response to inventory levels and marketplace dynamics like a vendor promotion, a competitor’s positioning, or even a price adjustment by an Amazon reseller.
For years this gave e-tailers a critical merchandising advantage over brick-and-mortar merchants, who continued to update price tags by hand. And worse for multi-channel retailers, it also created glaring discrepancies between online pricing, which could be updated instantly, and in-store price points, which often lag current promotions.
What’s more, the quickening cadence of vendors’ retail promotions is making the need for a real-time pricing solution increasingly urgent for dealers who print their tags manually and must constantly replace them to keep floor pricing accurate.
For a small number of BrandSource members, this all started to change about three years ago when SES-imagotag, the world’s largest maker of digital price tags, began exhibiting at the group’s buy fairs. Its electronic shelf labels, utilized by top retailers across the world and in more than 17,000 stores, level the playing field by allowing retailers to reset their showroom pricing with the click of a button.
As Jim Ristow, CEO of BrandSource parent AVB explained at the buying group’s Summit show in Nashville this spring, electronic price tags help dealers do much more than save on paper, printing and labor costs — they reduce lost sales and missed margin opportunities due to mispriced products that don’t reflect the latest vendor rebates or price moves by competitors. “You can follow the vendor road map and pre-program it so prices go down when a sale goes on, or you can track box pricing,” he said.
Despite SES-imagotag’s big-box client roster, business development director Adrien Boudier noted that the 25-year-old tech firm has always served independent merchants in Europe and brought the same smaller-dealer solution to BrandSource, including plug-and-play set-up, an easy-to-operate interface, and a complete Cloud-based platform. Hardware installation takes about half a day, he said, and the entire fully-automated system can be implemented in three weeks or less.
The only problem: it was prohibitively expensive. The high cost of the e-paper shelf labels and SES-imagotag’s backroom integration made renting the equipment almost mandatory.
Center: Darrell Haslett-Dick Van Dyke Appliance World
“They weren’t cheap,” recalled Darrell Haslett, marketing/merchandising VP at Dick Van Dyke Appliance World, the four-store BrandSource dealer that was among the first to sign on nearly three years ago. Haslett determined that the Springfield, Ill.-based business was losing about $2,000 a month due to pricing errors alone, but that the digital tags were costing the business $275 more at the time.
But thanks to BrandSource’s volume discounts and financing, plus in-house data management through AVB Marketing’s LINQ platform, and a doubling of SES-imagotag’s production capacity to some 50 million tags a year, the group was able to “take cost out and blow up the model,” Ristow announced at the Summit, saving dealers some $10,000 on average over four years.
“It will pay for itself quickly,” Ristow said.
What’s more, SES-imagotag’s steady investment in R&D — an annual infusion of 15 percent of company revenue — has led to the rollout of the award-winning VUSION tag, a tri-color shelf label that’s thinner, sharper and more durable than its predecessors. The next-gen tags are offered in a range of sizes, including 2.6-inch, 4.2-inch, 6-inches and 12-inch models, Boudier said, with dealers typically choosing the smallest iteration for personal electronics and accessories, and the 12-inch tag for kitchen vignettes and appliance bundles.
In addition, SES-imagotag has boosted the power and penetration of its in-store transmitters, so that 30,000 square feet of showroom space can be covered from a single access point, and the signals can pass through appliances.
SES-imagotag is also adding new capabilities to the system, which, in addition to displaying current prices and promotions, can provide product details to customers and coded information to the sales team. For example, the tags can show inventory levels and availability, to help determine delivery dates; can indicate product margins, so sales staff can focus on more profitable items; and can even display pricing at local competitors, based on vendor or AVB data.
The tags are also capable of creating an interactive showroom experience for customers. Embedded with an NFC (near-field communication) chip, shoppers can scan a QR code with their smartphones to bring up a product video, dealer website or coupon, and salespeople can program multiple tags to flash simultaneously to spotlight all the products that meet the customer’s criteria.
The improved program and pricing, along with a limited-time Stampede offer during the Summit, led to a 10-fold increase in dealer adoption at the show, Boudier said.
Despite their early sticker shock and a “rough” two-month pilot installation, Haslett and the rest of the early adopters at Dick Van Dyke are now fervent proponents of electronic price tags. Prior to signing on, the dealer regularly generated hundreds of paper tags across its four stores, including multiple printouts for the same product to reflect varying colors, sizes, finishes and features. The trick then was “to get them on the floor and remove them in time,” Haslett said, before having to honor a printed sale price after the promotion was over.
The company began slowly, initially tagging a limited number of focus pieces, and is now outside the rental window with upwards of 1,200 digital tags in 6- and 12-inch sizes. And thanks to what he described as “unbelievable savings” through the new AVB program, the goal is to go completely digital over the next year.
“We don’t really see it as an expense as much as a savings,” Haslett noted. “Having it all automated allows you to spend more time with your customers and on other aspects of your business. We see it as a win.”
“I’ve spoken to many owners,” he continued, “whether Power Dealers or smaller mom-and-pops, and no one wants to go back to paper tags after their rentals are up. Their managers say ‘Heck no, why would we want to? It saves us time, we’re not losing money now, and we know we’ll have our sale prices when we need them.’”
Haslett wholeheartedly agreed. “I would never want to run a store without the digital tags,” he added. “I can’t imagine doing business now without them.”
YSN is published by BrandSource parent company AVB Inc.