Spar South Africa is leading the way locally in the deployment of electronic shelf labelling. This is the report from Rick Wheeler, group retail systems manager at JSE-listed Spar.
In the last 18 months, 50 Spar and Tops stores have deployed the Pricer electronic shelf labelling system, supplied by XON company Skydirect. This represents the highest rate of deployment in South Africa, says Wheeler.
The 50th store to implement the Pricer electronic shelf labelling system was the Palm Sands Spar in Lichtenburg.
Spar decided to standardise on the Pricer electronic shelf labelling (ESL) system two years ago, after a number of stores had requested it. Wheeler led a team which investigated the various options on the market, and Pricer was chosen for three main reasons: "It is the largest company globally in the electronic shelf labelling market, it uses diffused infrared to communicate - adapted from the same technology that is used by the military to guide missiles - and it offered two-way communications between the label and the server. Two-way communications, where the actual label on the shelf can acknowledge price updates, is vital for price integrity and it makes it easy to monitor the status of each shelf label, and to pick up errors from a single status display."
Voluntary implementation
Spar has 830 stores in South Africa and 250 Tops liquor outlets. Wheeler expects another 300 more of the stores to adopt electronic shelf labelling in the next few years.
"It costs R1.2 million for an average-sized Spar store and R200 000 for a Tops store to implement the Pricer ESL system," says Wheeler. "Implementation is entirely voluntary, so given the cost, not all stores will go this route."
When coupled with an electronic point-of-sale system, the Pricer ESL system closes the automated price management loop: it makes use of thousands of individual digital displays which show the price of each item on the shelves. An average Spar will have more than 10 000 electronic shelf labels, while a Tops will have around 1 500.
As the electronic shelf labels derive their information from the same update file as the terminals at the point of sale, there is no chance of a discrepancy between the advertised and actual selling price; this against an industry-standard error rate of 5% when paper shelf labels are used.
"Before we chose Pricer, we did a cost-benefit analysis, and it showed a payback of 18 months in an average-sized Spar store. The feedback we have had, from store owners who have implemented the system, is that shoppers are more confident of the price integrity of stores which have implemented electronic shelf labelling," reports Wheeler.
Owners satisfied
Spar's store owners have been very satisfied with the Pricer ESL system, Wheeler adds. "Gotz von Westernhagen, who owns a group of stores in the Eastern Cape, has the deepest penetration of the Pricer ESL system in his 14 Spar, SuperSpar and Tops stores, using 100 000 electronic shelf labels.
"Everyone wins with electronic shelf labelling," Wheeler concludes. "Customers have more confidence in the accuracy of pricing; store owners can operate their stores more efficiently, and the more efficiently the stores are run, the more profitable they are, and the more they will grow, which benefits the organisation as a whole.
"We're at the same inflection point as we were with electronic point of sale and barcode scanning 20 years ago. Where barcode scanning was only starting to gather momentum in 1988, today it is a standard. In the next decade, electronic shelf labelling should become ubiquitous, which means those who have done it so far will enjoy competitive advantage for years to come."
"Spar 's pioneering spirit has put it at the forefront of retail in South Africa," says Hendrik Bredenkamp, MD of Skydirect, a company in the XON group. "We look forward to many more years of service to Spar, its retailers and their shoppers."
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