If you buy ESLs now you could also get a free Audi Q5

19 Oct, 2016
Hendrik Bredenkamp, MD of XON Retail

There has never been a better time to buy electronic shelf labels (ESL) than now.

“Many customers have told us that they understand the benefits of the labels and they can see they’d be beneficial in their stores,” says Hendrik Bredenkamp, MD of XON Retail. “But the price often makes them hesitate. Once the labels are in they never look back but it’s overcoming that initial hurdle that takes some getting used to.”

XON Retail is the only global Pricer partner to refurbish and resell Pricer ESLs pulled from active duty in France. It fully refurbishes the units at its ISO-certified facility in Midrand. Refurbishment covers a full physical examination of each and every unit, battery replacement, and complete digital diagnostics.

Refurbished labels are being offered back for active duty at a fraction of the cost of new labels and also with full swap out warranties.

“These labels cost just R29 each so they are highly commoditised – they cost the same as a 2L milk which lasts you three days if you’re lucky,” says Bredenkamp, “and retailers can get annual warranties for just 2,5% of the cost of the labels – which is slightly more than the cost of a plastic shopping bag.”

Putting the unit cost savings into perspective compared with the price of brand new units Bredenkamp says that an average SPAR can save the equivalent of the price of a top of the range Audi Q5 or BMW X1.

“The benefits of ESLs are well documented and, coupled with the low cost of the refurbished units and the full warranty, we already have customers taking the units as they come off the production line,” he says.

And the units last between 5 and 10 years before they need any typical maintenance, which is usually only a battery replacement. The replacements can be done in-store, with labels removed directly from shelves for just 7 seconds during which time the battery is replaced and the ESL put back on the shelf. Only those batteries that have run down are replaced since the tags can be checked using a shelf-side remote control.

Compared with a normal desktop computer that lifespan of the digital shelf tags is unparalleled. A typical PC complies with Moore’s law and usually needs replacement after 18 months. Even sweating assets usually sees a typical office PC giving a useful life of three to four years. And, compared against another common office inhabitant, the printer, ESLs cost very little. Printers usually cost very little but the full cost of owning and operating one for a year is normally 6 times the cost of buying it.

“With ESLs it’s the other way around,” says Bredenkamp. “You pay upfront and there’s little to no annuity cost so it’s an easy to understand expense that can be absorbed operationally.”

ESL immediate benefits overview:

  • Improve operational efficiencies (fewer people changing prices)
  • Cut costs (fewer people changing prices, management tool for interrogating stock levels)
  • Reduce out-of-stocks (more permanent prices on shelves leave gaps where product belongs, managers can interrogate stock, store room, and depot levels at the shelf edge)
  • Improve ordering (more visible low stock levels and an interrogation capability for where stock is makes ordering slicker, more efficient)
  • Product performance (see rate of sale, last sale, order date and time, and more at shelf edge and allocate more space to better performers)
  • Improve rate of sale (flashing tags draw attention to specific products for both employees and shoppers)

These reasons and more and more are why over 200 SPAR, KwikSPAR, SuperSPAR and Tops have employed the digital tags, consistently demonstrating return on investment (ROI) in 18 months. More than 75 Pick n Pay stores have done the same, there are over four million of these tags deployed in more than eight Southern Africa countries. Monument SuperSPAR in Pretoria deployed 22 000 ESLs (against 24 000 SKUs) and achieved a 4% gross profit growth on the sales floor as a result.

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