Legislatures are restless; they sense the barbarians at the gate for the coming election cycles. What better way to score populist points than by attacking rising food costs? But instead of trying to solve the underpinning economic problems causing these issues, they’ve decided to focus on the evils of technology and “Big Grocery” as the culprit…
Maryland, Connecticut, and New York have been the first of many rushing laws through their statehouses to prevent dynamic pricing. Electronic shelf labels (ESLs) have been an ancillary target of these attacks on the industry. But they’ve got it all wrong: predatory surge pricing and ESLs are two separate issues.
The country’s largest grocer, Walmart, announced that it would roll out ESLs in all of its U.S. stores by the end of 2026. Grocery heavyweights Kroger, Aldi and Amazon Grocery (Whole Foods) are all rolling the tech out across the county. The ESL market. valued today at just over $2 billion, is expected to grow to $7.3 billion by 2033. ESLs are here to stay.
For years, discussions about electronic shelf labels have centered on a familiar set of benefits: labor savings, pricing accuracy, and the elimination of countless hours spent replacing paper tags. Those benefits are real; they’re important. But they are also missing the bigger picture.
The Case For ESLs
The grocery industry has spent decades digitizing almost every aspect of their operations: payments, loyalty programs, inventory, ordering, supply chains… Yet the most important point of decision in the store – the shelf itself – remains largely analog.
The truism that the shelf is where “grocery wins or loses the trip” exists for a reason, and electronic shelf labels can help in so many different ways.
ESLs are not simply a technology investment, they are infrastructure. And like most forms of infrastructure, their value compounds over time. When interstate highways were built, the benefit wasn’t simply easier travel or decreased transit time. Entire industries emerged because of the network that was created.
The same principle applies here when the shelf becomes truly connected. It fundamentally alters how stores operate.
Traditionally, price changes have been operational events. A decision is made somewhere in headquarters, a file is generated, labor is scheduled, tags are printed, and associates execute the change. The process is expensive, time-consuming, and prone to error.
Operational efficiency-monster Walmart reports that the older paper price tag system can eat up two full days of employee time, per week. A typical supermarket has over 30,000 SKUs with thousands of price changes weekly.
With ESLs, pricing becomes data-driven rather than labor-driven. Changes can occur instantly and promotions can be deployed with precision as pricing discrepancies decline. Store teams spend less time maintaining the ‘ticker-tape’ parade of shelf price-tags and more time stocking or serving customers. Compliance improves, too.
Think of this use-case as a basic Level 1; a huge improvement in labor costs and accuracy, though not much more. But the potential benefits only get better.
The Level 2 beneficiary is the customer. Consumers increasingly expect the same speed, accuracy, and responsiveness inside stores that they experience online. That means access to data on things like: country of origin, organic ratings, inventory levels, customer reviews, nutrition, ingredients, and a variety of other data points. Paper tags and product packaging simply can’t provide this.
Customers expect fairness, transparency, and consistency – these connected shelf labels offer a solution for customers to learn so much more.
Few industries rely more heavily on trust than grocery retail. Can you imagine the trust built by allowing a customer to pull up a product’s price history to see if the discount is a good one? Look at how consumers research and evaluate Black Friday “sales” today versus their mindless buying of 15 years ago. Providing pricing history data to customers might be the solution to dynamic pricing concerns.
But what about dignity? Having ESLs note a government approved item for SNAP or EBT saves a customer from learning it’s not approved at the register in front of an audience. Consider the ability to have prices relayed audibly or enlarged for those with difficulty seeing. There are multiple ways ESLs can offer help to older shoppers or those with disabilities.
We’ve talked about nutrition and allergens with new product labelling. For customers who have a life-threatening allergy; or a family member that does, knowing if a product contains harmful allergens is exhausting. Imagine an ESL that allows them to easily check.
Colorful ESLs can highlight active sales, allergen friendliness, whether an item is SNAP approved, and they can bring the same color coding messaging that shoppers are used to.
These are just a few of the Level 2 ESL benefits customers could see – all of them improving in-store shopper experience. The larger opportunity lies in the convergence of digital commerce and physical retail.
The Connected Store
We know that retailers are investing heavily in personalization, loyalty ecosystems, retail media networks, and artificial intelligence. Each of these initiatives depends on one critical factor: the ability to connect decisions made in software to actions occurring at the shelf.
Electronic shelf labels provide a platform upon which future capabilities – like dynamic promotions, real-time inventory, omni-channel experiences, and AI-driven merchandising – can be built. These Level 3 benefits for retailers are massive.
For in-store fulfillment imagine in-store GPS highlighting not just where the product is, but the fastest way to get there – and a flashing signal light when the associate is nearby.
Consider a future in which inventory levels, demand forecasts, category pricing, weather conditions, and promotional performance are all analyzed continuously. The ability to translate those insights instantly from the shelf is no longer theoretical.
Efficiency focuses on doing things cheaper; agility focuses on responding faster. The grocery industry has historically focused on operational efficiency. The next decade may require the same level of attention to operational agility.
AI-assisted technology can actually make that happen in ways that weren’t practical before. Electronic shelf labels may be one of the most important – and most overlooked – building blocks in making the connected, agile future possible.
What Are The Costs Of ESLs?
None of this is to suggest that electronic shelf labels are without challenges. Major infrastructure investments rarely are.
Implementation costs remain significant for retailers. Return-on-investment calculations vary by chain size, labor costs, store format, and even existing technology infrastructure. Not every retailer will arrive at the same answer.
The grocery industry operates on some of the thinnest margins in the economy. For many retailers, deploying ESLs across hundreds of stores represents a significant capital commitment that must compete with other priorities, including supply chain investments, store remodels, cybersecurity initiatives, labor retention programs, and digital commerce capabilities.
And let’s face it: The current cost per ESL tag is currently higher than it should be. Additionally, there are software licenses, base stations, installation, and setups costs; plus ongoing expenses like battery replacement to consider. There is also the real issue of vendor dependency.
As stores become increasingly connected, retailers must carefully evaluate technology partners, interoperability standards, and long-term support requirements. The grocery industry has experienced enough technology cycles to know that flexibility counts for a lot. Systems that appear innovative today can become constraints tomorrow if they limit integration, scalability, or future innovation.
The ROI calculation must make sense.
Retailers should resist the temptation to view ESL adoption as a technology project and instead evaluate it as a long-term operating model and infrastructure decision. The most successful implementations will likely occur where shelf-edge technology is integrated into broader merchandising, pricing, inventory, and customer engagement strategies.
The question is not whether electronic shelf labels can save on labor; most will. The more important – and exciting – question is what becomes possible once every shelf in the store becomes digitally connected. That answer may ultimately prove far more valuable than the labor savings that justified the investment in the first place.
When Uber was first introduced to investors, they ran the numbers and found that the existing taxi market wasn’t big enough to justify the investment. Mark Cuban and Gary Vaynerchuk famously passed on it. What they failed to realize was that Uber, LYFT and others like it didn’t just replace the existing taxis, they expanded the global market for individuals to use the product.
The data streams coming out of a fully connected store – including and especially inventory tracking – will absolutely have the same level of transformative power for the industry.
In Defense Of Tech Upgrades Like ESLs
There is a growing sense of unease surrounding the long-term implications of artificial intelligence. Not the AI tools most people interact with today, which are largely sophisticated assistants and productivity enhancers, but the prospect of increasingly autonomous systems that could fundamentally reshape labor markets, economic structures, and society itself.
Whether those fears ultimately prove justified is almost beside the point. The perception of disruption is real, and as AI capabilities continue to advance, more people are beginning to question what their role will be in the economy of the future.
Layer onto that concerns about surveillance technologies and the expanding use of consumer data to influence pricing, promotions, and shopping experiences and it’s no wonder people are scared.
Arizona, Rhode Island and Maine are just a handful of states with bills looking to restrict or ban ESLs entirely. Federal legislation against ESLs has been proposed but has not seen the advancement that state laws have.
If consumers begin to believe that technology is creating different economic outcomes for different groups of people – or that access to affordable food is increasingly determined by algorithms rather than transparent market forces – the issue quickly moves beyond retail innovation and into the realm of public policy.
At that point, the conversation is no longer about technology adoption.
It becomes a question of trust. And when trust erodes, regulatory scrutiny and political intervention are rarely far behind. Retailers, technology providers, and policymakers would be wise to recognize that the public’s acceptance of these innovations will depend not only on what the technology can do, but on whether consumers believe it is being deployed fairly, transparently, and in their best interests.
Electronic shelf labels are the newest tool that grocery retailers can use to increase agility and profitability. But they are so much more, and we need to defend their use. While the technology may enable more dynamic pricing capabilities, retailers should be thoughtful about how those capabilities are deployed.
As an industry, we need to get better at how we roll out new technology features – and have open discussions with our customers about their use and purpose. Because if we don’t control the narrative, someone else is going to do it for us.