The Revolution of Price Management in Retail

Price management is one of the most critical and complex aspects of retail operations. It involves setting, updating, and displaying prices for thousands of products across multiple channels and locations. It also affects customer perception, satisfaction, and loyalty, as well as the retailer’s profitability and competitiveness.

Traditionally, price management has been done manually, using paper labels and stickers to display prices on shelves and products. This method is time-consuming, labor-intensive, error-prone, and inflexible. It limits the retailer’s ability to react to market changes, offer dynamic pricing, and synchronize prices across online and offline channels. It also generates a lot of paper waste and environmental impact.

Fortunately, technology has brought a revolution to price management in retail. Two key innovations are driving this transformation: electronic labels and cloud platforms. These technologies enable retailers to automate, optimize, and enhance their price management processes, while also creating new opportunities for customer engagement, data analytics, and business intelligence.

From Paper to Pixels: The Rise of Electronic Labels

Electronic labels, also known as electronic shelf labels (ESLs), are digital devices that display product prices and information on shelves and products. They are connected to a central system via wireless communication, such as radio frequency (RF), infrared (IR), or near-field communication (NFC). They can be updated remotely and instantly, allowing retailers to change prices in real time, without the need for manual intervention.

ESLs offer many benefits for retailers and customers alike. For retailers, ESLs can reduce labor costs, improve pricing accuracy, increase operational efficiency, and enable dynamic pricing strategies. For customers, ESLs can provide clear and consistent pricing, enhance product information, and enable interactive features, such as product comparison, ratings, reviews, and personalized offers.

According to a report by MarketsandMarkets, the global market for ESLs is expected to grow from USD 1.4 billion in 2020 to USD 6.8 billion by 2025, at a compound annual growth rate (CAGR) of 27.9%. The main factors driving this growth are the increasing adoption of ESLs by retailers, especially in the grocery, pharmacy, and consumer electronics sectors, as well as the rising demand for omnichannel retailing, IoT solutions, and smart store technologies.

How Cloud Platforms Are Transforming Retail Operations

Cloud platforms are the backbone of retail IoT, providing the infrastructure, software, and services to connect, manage, and analyze data from ESLs and other IoT devices. Cloud platforms enable retailers to store, process, and access large amounts of data from multiple sources, such as inventory, sales, customer behavior, and external factors. They also offer tools and applications to optimize and automate retail operations, such as pricing, merchandising, marketing, and supply chain management.

Cloud platforms offer many advantages for retailers and customers alike. For retailers, cloud platforms can reduce IT costs, increase scalability, improve performance, and enhance security. They can also provide real-time insights, predictive analytics, and artificial intelligence (AI) capabilities, enabling retailers to make data-driven decisions, improve customer experience, and generate new revenue streams. For customers, cloud platforms can enable seamless and personalized shopping experiences, across online and offline channels, as well as new modes of interactivity, such as mixed reality, voice, and gesture.

According to a report by Grand View Research, the global market for cloud computing in retail is expected to grow from USD 11.9 billion in 2019 to USD 39.6 billion by 2025, at a CAGR of 20.6%. The main factors driving this growth are the increasing adoption of cloud platforms by retailers, especially in the e-commerce, fashion, and beauty sectors, as well as the rising demand for digital transformation, omnichannel retailing, and customer-centric solutions.

Electronic Labels (ESLs): The New Norm in Retail

Dynamic Pricing: Adapting to Market Demands Instantly

One of the main benefits of ESLs is that they enable dynamic pricing, which is a pricing strategy that applies variable prices instead of fixed prices. Dynamic pricing allows retailers to adjust prices according to various factors, such as demand, supply, competition, seasonality, and customer behavior. Dynamic pricing can help retailers increase revenue, margins, and profitability, as well as improve customer satisfaction and loyalty.

According to a report by McKinsey, dynamic pricing can drive sales growth of 2 to 5 percent and margin increases of 5 to 10 percent for retailers. However, implementing dynamic pricing requires a robust and flexible technology platform that can collect, process, and analyze large amounts of data from multiple sources, such as inventory, sales, customer behavior, and external factors. It also requires a clear and consistent pricing strategy that aligns with the retailer’s value proposition and customer expectations.

Enhanced Shopping Experience with Smart Labels

Another benefit of ESLs is that they can enhance the shopping experience for customers by providing clear and consistent pricing, as well as additional product information and features. For example, ESLs can display product ratings, reviews, comparisons, and personalized offers, as well as enable interactive features, such as mixed reality, voice, and gesture. ESLs can also incorporate security tags, helping supermarkets minimize theft. They can also be used to prevent counterfeiting by using blockchain technology to track the origin of the food and every step of the product’s journey in an unhackable format. This guarantees the legitimacy of the food thus increasing consumer confidence .

According to a report by Mordor Intelligence, the global market for ESLs is expected to grow from USD 1.4 billion in 2020 to USD 6.8 billion by 2025, at a compound annual growth rate (CAGR) of 27.9%. The main factors driving this growth are the increasing adoption of ESLs by retailers, especially in the grocery, pharmacy, and consumer electronics sectors, as well as the rising demand for omnichannel retailing, IoT solutions, and smart store technologies.

Cloud Platforms: The Backbone of Retail IoT

Real-Time Data Analysis and Actionable Insights

One of the main advantages of cloud platforms is that they enable real-time data analysis, which is the process of capturing and acting on information as it happens. Real-time data analysis can help retailers to quickly identify trends, patterns, and anomalies, and make informed decisions based on data-driven insights. For example, real-time data analysis can help retailers to:

Monitor and optimize inventory levels and turnover, reducing stockouts, overstocking, and waste.
Adjust prices dynamically based on demand, supply, competition, and customer behavior, increasing revenue and profitability.
Personalize product recommendations and offers based on customer preferences, purchase history, and location, improving customer satisfaction and loyalty.
Track and measure the effectiveness of marketing campaigns and promotions, and optimize them accordingly, maximizing return on investment.
Predict future demand and trends, and plan ahead for inventory, staffing, and logistics, enhancing operational efficiency and agility.

According to a report by Forbes, real-time analytics can drive sales growth of 2 to 5 percent and margin increases of 5 to 10 percent for retailers. However, implementing real-time analytics requires a robust and flexible technology platform that can collect, process, and analyze large amounts of data from multiple sources, such as inventory, sales, customer behavior, and external factors. It also requires a clear and consistent data strategy that aligns with the retailer’s business goals and customer expectations.

Integrating Inventory Management with Pricing Strategies

Another advantage of cloud platforms is that they enable the integration of inventory management with pricing strategies, which is the process of setting, updating, and displaying prices for products based on inventory levels and other factors. Integrating inventory management with pricing strategies can help retailers to balance supply and demand, and optimize their margins and profitability. For example, integrating inventory management with pricing strategies can help retailers to:

Use cost-plus pricing, which is a pricing strategy that adds a fixed percentage of profit to the cost of each product, ensuring a consistent margin regardless of inventory levels.
Use price skimming, which is a pricing strategy that sets high initial prices for new or innovative products, and lowers them gradually as inventory levels increase and demand decreases, maximizing revenue from early adopters.
Use penetration pricing, which is a pricing strategy that sets low initial prices for new or existing products, and raises them gradually as inventory levels decrease and demand increases, attracting more customers and gaining market share.
Use dynamic pricing, which is a pricing strategy that applies variable prices instead of fixed prices, and adjusts them in real time based on inventory levels and other factors, such as demand, supply, competition, and customer behavior, maximizing revenue and profitability.

According to a report by Paddle, different pricing strategies can have different impacts on customer perception, satisfaction, and loyalty, as well as the retailer’s revenue, margin, and profitability. However, implementing pricing strategies requires a reliable and accurate inventory management system that can track and update inventory levels in real time, and a flexible and responsive pricing system that can display and change prices accordingly.

Maximizing the Potential of IoT in Retail

IoT in retail is not just a trend, but a necessity for retailers who want to stay ahead of the competition and meet the evolving needs and expectations of their customers. IoT in retail can help retailers to create smart, connected, and personalized shopping experiences, as well as optimize their operations, reduce costs, and increase profits. However, to fully leverage the potential of IoT in retail, retailers need to adopt a holistic and strategic approach that integrates various technologies, platforms, and data sources.

The Symbiosis of ESLs and IoT for Efficient Store Management

One of the key technologies that can enable IoT in retail is electronic shelf labels (ESLs), which are digital devices that display product prices and information on shelves and products. ESLs are connected to a central system via wireless communication, such as radio frequency (RF), infrared (IR), or near-field communication (NFC). They can be updated remotely and instantly, allowing retailers to change prices in real time, without the need for manual intervention.

ESLs can also communicate with other IoT devices, such as sensors, cameras, smart phones, and tablets, creating a network of smart shelves that can collect, process, and analyze data from multiple sources. This data can provide valuable insights into customer behavior, preferences, and feedback, as well as inventory levels, product availability, and shelf conditions. By using this data, retailers can optimize their pricing strategies, merchandising decisions, marketing campaigns, and customer engagement initiatives, as well as improve their inventory management, supply chain management, and waste reduction.

Case Studies: Retailers Harnessing the Power of IoT Cloud Platforms

Another key technology that can enable IoT in retail is cloud platforms, which provide the infrastructure, software, and services to connect, manage, and analyze data from ESLs and other IoT devices. Cloud platforms enable retailers to store, process, and access large amounts of data from multiple sources, such as inventory, sales, customer behavior, and external factors. They also offer tools and applications to optimize and automate retail operations, such as pricing, merchandising, marketing, and supply chain management.

Cloud platforms also enable real-time data analysis, which is the process of capturing and acting on information as it happens. Real-time data analysis can help retailers to quickly identify trends, patterns, and anomalies, and make informed decisions based on data-driven insights. For example, real-time data analysis can help retailers to monitor and optimize inventory levels and turnover, adjust prices dynamically based on demand, supply, competition, and customer behavior, personalize product recommendations and offers based on customer preferences, purchase history, and location, track and measure the effectiveness of marketing campaigns and promotions, and predict future demand and trends.

Some examples of retailers who are harnessing the power of IoT cloud platforms are:

Walmart, which uses Microsoft Azure IoT to connect and monitor its refrigeration and HVAC units across its stores, ensuring optimal temperature and food safety, as well as reducing energy consumption and costs.
Carrefour, which uses Google Cloud IoT to connect and update its ESLs across its stores, enabling dynamic pricing, improved product information, and interactive features for customers, as well as reducing labor costs and paper waste.
Amazon, which uses AWS IoT to power its Amazon Go stores, which are cashierless and checkout-free, using sensors, cameras, and computer vision to track what customers pick up and charge them automatically when they leave.

The Environmental and Operational Benefits of Going Digital

Going digital is not only a trend, but also a necessity for retailers who want to reduce their environmental impact and improve their operational efficiency. By using digital technologies, such as electronic labels and cloud platforms, retailers can eliminate paper waste, save energy, optimize inventory, and enhance customer experience. In this section, we will explore some of the benefits of going digital for retailers and customers alike.

Reducing Waste with Digital Labels

One of the main benefits of going digital is that it can reduce the amount of waste generated by paper labels and stickers. Paper labels and stickers are often used to display prices and product information on shelves and products. However, they are also prone to errors, damage, and obsolescence, requiring frequent replacement and disposal. Paper labels and stickers also consume a lot of resources, such as paper, ink, glue, and energy, and generate a lot of carbon emissions and environmental impact.

By contrast, digital labels, such as electronic shelf labels (ESLs), are digital devices that display product prices and information on shelves and products. They are connected to a central system via wireless communication, such as radio frequency (RF), infrared (IR), or near-field communication (NFC). They can be updated remotely and instantly, allowing retailers to change prices in real time, without the need for manual intervention. Digital labels are also durable, reusable, and recyclable, reducing the need for replacement and disposal.

According to a report by the American Apparel & Footwear Association (AAFA), the International Apparel Federation (IAF), and 128 additional organizations, shifting to the use of digital labels would significantly reduce labeling waste and aid in decarbonization efforts, resulting in the elimination of at least 343,000 MT of CO2e from industry supply chains. The report also states that digital labels would provide more information and access to consumers, such as more in-depth materials and origin information, as well as details about resale, repair, rental, upcycling, or recycling.

Streamlining Store Operations and Labor Efficiency

Another benefit of going digital is that it can streamline store operations and labor efficiency, by automating and optimizing various processes, such as pricing, inventory, marketing, and customer service. By using digital technologies, such as cloud platforms and artificial intelligence (AI), retailers can store, process, and access large amounts of data from multiple sources, such as inventory, sales, customer behavior, and external factors. They can also use tools and applications to analyze and act on this data, enabling data-driven decisions and insights.

For example, by using cloud platforms and AI, retailers can implement dynamic pricing, which is a pricing strategy that applies variable prices instead of fixed prices, and adjusts them in real time based on various factors, such as demand, supply, competition, and customer behavior. Dynamic pricing can help retailers increase revenue, margins, and profitability, as well as improve customer satisfaction and loyalty. According to a report by McKinsey, dynamic pricing can drive sales growth of 2 to 5 percent and margin increases of 5 to 10 percent for retailers.

Another example is by using cloud platforms and AI, retailers can integrate inventory management with pricing strategies, which is the process of setting, updating, and displaying prices for products based on inventory levels and other factors. Integrating inventory management with pricing strategies can help retailers balance supply and demand, and optimize their margins and profitability. According to a report by Paddle, different pricing strategies can have different impacts on customer perception, satisfaction, and loyalty, as well as the retailer’s revenue, margin, and profitability.

By going digital, retailers can also reduce labor costs, improve labor efficiency, and enhance employee experience. For instance, by using digital labels and cloud platforms, retailers can automate and simplify the process of updating and displaying prices, eliminating the need for manual intervention and reducing human errors. This can save time, money, and resources, as well as improve accuracy and consistency. By using cloud platforms and AI, retailers can also automate and optimize other tasks, such as marketing, customer service, and supply chain management, freeing up staff to focus on more value-added activities, such as customer engagement, product innovation, and quality assurance.

The Challenges and Considerations for Retailers

While electronic labels and cloud platforms offer many benefits for retailers and customers, they also pose some challenges and considerations that need to be addressed. In this section, we will explore some of the key issues that retailers face when implementing and using these technologies, and how they can overcome them.

Overcoming Implementation Hurdles

Implementing electronic labels and cloud platforms is not a simple task. It requires a significant investment in time, money, and resources, as well as a clear vision and strategy. Some of the common hurdles that retailers face when implementing these technologies are:

Lack of understanding of the problem. Retailers need to identify the specific business problem that they want to solve with these technologies, and how they align with their value proposition and customer expectations. They also need to conduct a thorough analysis of their current data and processes, and identify the gaps and opportunities for improvement.
Managing change. Retailers need to communicate the benefits and reasons for the implementation to all stakeholders, including employees, customers, and suppliers. They also need to provide adequate training and support to ensure a smooth transition and adoption. They also need to monitor and measure the impact and outcomes of the implementation, and make adjustments as needed.
Choosing the right solution. Retailers need to evaluate and compare different options for electronic labels and cloud platforms, and select the one that best suits their needs and budget. They also need to consider the compatibility and integration of these solutions with their existing systems and infrastructure, as well as the scalability and security of these solutions.

To overcome these hurdles, retailers can follow some best practices, such as:

Engaging in design thinking and user research. Retailers can use design thinking and user research methods, such as interviews, surveys, and prototyping, to understand the needs and pain points of their customers and employees, and to generate and test ideas for solutions.
Partnering with experts and vendors. Retailers can leverage the expertise and experience of external partners and vendors, who can provide guidance, support, and solutions for electronic labels and cloud platforms. Retailers can also benefit from the best practices and learnings of other retailers who have successfully implemented these technologies.
Adopting an agile and iterative approach. Retailers can adopt an agile and iterative approach to implementation, which involves breaking down the project into smaller and manageable phases, and delivering and testing each phase incrementally. This can help retailers to reduce risks, costs, and complexity, and to incorporate feedback and changes quickly.

Ensuring Data Security in a Connected Retail Environment

Data security is another major challenge and consideration for retailers who use electronic labels and cloud platforms. These technologies involve the collection, processing, and transmission of large amounts of data, including sensitive and personal data, such as customer transactions, preferences, and feedback. These data are valuable for retailers, but also for cybercriminals, who can exploit them for malicious purposes, such as identity theft, fraud, and ransomware.

Data breaches can have severe consequences for retailers, such as reputational damage, customer churn, legal liability, and financial losses. According to a report by IBM, the average cost of a data breach in the retail industry was $4.1 million in 2020, and the average time to identify and contain a breach was 233 days. Retailers need to take proactive and preventive measures to protect their data and systems from cyberattacks, and to ensure compliance with data protection and privacy regulations, such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in that US state.

Some of the best practices and solutions for ensuring data security in a connected retail environment are:

Using data discovery and classification technology. Retailers can use data discovery and classification technology to scan their data stores, both in the cloud and on premises, and label sensitive or regulated data by type and purpose. Then they can prioritize their data security efforts accordingly to improve data security and ensure regulatory compliance.
Encrypting and anonymizing data. Retailers can use encryption and anonymization techniques to protect their data from unauthorized access and use. Encryption involves transforming data into an unreadable format that can only be decrypted with a key. Anonymization involves removing or altering data that can identify an individual, such as names, addresses, or phone numbers.
Implementing access control and authentication policies. Retailers can implement access control and authentication policies to restrict and monitor who can access and modify their data and systems. Access control involves granting or denying access to data and systems based on predefined rules and roles. Authentication involves verifying the identity of users and devices before granting access.
Using cloud security and management tools. Retailers can use cloud security and management tools to secure and manage their cloud platforms and data. These tools can provide features such as firewall, antivirus, backup, recovery, monitoring, and auditing, as well as compliance and governance capabilities.

Looking Ahead: What’s Next for Retail Technology?

Retail technology is constantly evolving and innovating, creating new opportunities and challenges for retailers and customers. In this section, we will explore some of the emerging trends and technologies that are shaping the future of retail, and how they can impact pricing and customer experience. We will focus on two areas: predictive analytics and artificial intelligence (AI) in future pricing strategies, and augmented reality (AR) and electronic shelf labels (ESLs) integration.

Predictive Analytics and AI in Future Pricing Strategies

Predictive analytics and AI are technologies that use machine learning algorithms to analyze historical data and predict future outcomes. They can help retailers to optimize their pricing strategies, by taking into account various factors, such as demand, supply, competition, customer behavior, and external factors. They can also enable dynamic pricing, which is a pricing strategy that applies variable prices instead of fixed prices, and adjusts them in real time based on these factors.

Predictive analytics and AI can offer many benefits for retailers and customers, such as:

Increasing revenue, margins, and profitability, by setting optimal prices that match the market conditions and customer willingness to pay.
Improving customer satisfaction and loyalty, by offering fair and transparent prices that reflect the value of the products and services.
Enhancing operational efficiency and agility, by automating and simplifying the pricing process, and reducing human errors and biases.
Generating new insights and opportunities, by discovering hidden patterns and trends in the data, and creating new pricing models and strategies.

According to a report by BCG, AI pricing transformations can drive sales growth of 2 to 5 percent and margin increases of 5 to 10 percent for retailers. However, implementing predictive analytics and AI for pricing requires a robust and flexible technology platform that can collect, process, and analyze large amounts of data from multiple sources, and a clear and consistent pricing strategy that aligns with the retailer’s value proposition and customer expectations.

Emerging Technologies: Augmented Reality and ESLs Integration

Augmented reality (AR) is a technology that superimposes computer-generated content over a real world environment, creating a mixed reality that enhances the user’s perception and interaction. Electronic shelf labels (ESLs) are digital devices that display product prices and information on shelves and products. They are connected to a central system via wireless communication, such as radio frequency (RF), infrared (IR), or near-field communication (NFC). They can be updated remotely and instantly, allowing retailers to change prices in real time, without the need for manual intervention.

AR and ESLs integration is an emerging trend that can enhance the shopping experience for customers, by providing clear and consistent pricing, as well as additional product information and features. For example, AR and ESLs integration can:

Display product ratings, reviews, comparisons, and personalized offers, as well as enable interactive features, such as mixed reality, voice, and gesture.
Prevent counterfeiting by using blockchain technology to track the origin of the products and their journey in an unhackable format.
Improve customer engagement and loyalty by creating immersive and gamified experiences, such as scavenger hunts, quizzes, and rewards.

Call to Action: Embracing Innovation in Retail

The retail industry is undergoing a rapid and profound transformation, driven by the changing needs and expectations of customers, the increasing competition from online and offline players, and the advancement of technology. To survive and thrive in this dynamic and challenging environment, retailers need to embrace innovation and adopt new technologies, such as electronic labels and cloud platforms, that can help them create smart, connected, and personalized shopping experiences, as well as optimize their operations, reduce costs, and increase profits.

Why Retailers Must Adopt IoT and Cloud Platforms Now

IoT and cloud platforms are two of the key technologies that can enable innovation in retail. IoT, or the Internet of Things, is the network of physical objects that are embedded with sensors, software, and other technologies that enable them to connect and exchange data with other devices and systems over the internet. Cloud platforms are the infrastructure, software, and services that provide the storage, processing, and access of data and applications over the internet, without the need for local servers or devices.