Digital Tags Help Ensure the Price Is Right

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SOME decades ago, a grocery store's aisles were often filled with "chunk-a-chunk-a" sounds, as clerks stamped prices to the tops of cans and boxes before putting them on shelves. It was a labor-intensive operation, but it did result in a price being affixed to most every item in the store.

Then bar codes and computerized cash registers arrived. In most stores, prices were posted on shelves but not on the items themselves.

I've always trusted that the system works well -- and I've tapped my foot impatiently when a shopper ahead of me slowed the checkout process by closely watching the prices that came up, as if the scanner might have recorded the wrong product code. What I hadn't realized was that there is valid reason to be vigilant. The potential problems originate on the shelves, in the form of the shelf tags, which may or may not match the current price in a store's computer.

A typical grocery store puts 5,000 items on sale in a week and removes sale prices from another 5,000. That creates an abundance of opportunities for mismatches when workers print out the new price labels in a back room, then hunt for the proper place on the shelf to attach them.

This has left store technology in an incomplete state: mostly but not entirely computerized. The next step is to go completely paperless by putting small, battery-powered digital price tags on the shelves. Price changes can then be received wirelessly from the store's network, ensuring that the price displayed on the shelf and the one called up at the checkout counter are the same.

Altierre, a digital tag and sensor maker based in San Jose, Calif., has raised more than $80 million from investors and spent 10 years developing the technology for digital tags and the wireless networks they require. It asserts that outfitting a store with 20,000 to 25,000 tags, each costing about $5, would produce labor savings that would pay back the investment in two to two-and-a-half years.

The tags can provide multiple screens of information. To reduce power consumption, Altierre uses black-on-gray liquid crystal displays, the same type used in digital watches and pocket calculators. The most generous thing that can be said about this type of display is that its legibility is satisfactory.

At Altierre's headquarters, a full-size mock grocery store is set up with its tags installed on the shelves. There, I was surprised to find that the LCD's legibility problems didn't seem so significant: shoppers stand close to the shelves anyway. On some shelves, Altierre showed off an improved tag, at a higher price, that uses E Ink technology. Its text is noticeably crisper than that of an ordinary LCD tag.

I asked Sunit Saxena, Altierre's chief executive, why grocery stores haven't leapt at the chance to save themselves money by installing the tags. "They're treading carefully because the fear is, they'll put 30,000 of these in a store where people are used to seeing paper and it will be a drastic change," he said. "They worry that their sales will drop."

Digital sign technology is hardly new. In France, customers are accustomed to digital signs in grocery stores, where an LCD tag with limited display capacity has been on shelves for about 10 years, says Michel Itié, an I.T. consultant. It shows only the price and the price per weight, so it requires a separate paper tag to show an item's name.

Many French hypermarkets, which combine grocery stores and department stores, also use the tags. Mr. Itié is working with a company that is installing Altierre's technology for the hypermarket chain E.Leclerc, which has installed 300,000 new LCD tags in 10 stores and plans to deploy a total of two million tags by year-end.

In the United States, grocery stores still cannot justify making the investment in digital price tags, says Patrick C. Fitzpatrick, president of Atlanta Retail Consulting. "If the payback was advantageous, you'd see them everywhere."

Stores are eager, however, to find an affordable way to reduce price-related errors. Mr. Fitzpatrick says that when grocery store managers conduct "price integrity audits" and compare price labels on the shelves with the prices in the store computer, paper labels are only 95 percent to 96 percent accurate.

"If you make 10,000 price changes and you have 1,000 stores, you have 10 million instances," says Chris Donnelly, a managing director of Accenture who specializes in retail consulting. "Even if you get the right label in the right place 99 percent of the time, that leaves 100,000 misplaced labels."

Addressing this problem helps make the case for digital signs that labor savings alone can't, Mr. Donnelly says. Another advantage is the tags' ability to provide multiple screens of product information. He gives an example: grocery store customers who have a gluten allergy could press a button and quickly see a symbol that shows whether gluten is in a particular product.

SO far, the only company in the United States that has adopted Altierre's technology is Kohl's, the department store chain. Last month, it completed installation of digital signs in its stores. It uses a large-format LCD screen that sits atop, say, a rack of clothes or on a countertop in the jewelry department, showing a description and a sale price. This allows the store to offer a discount without having to affix new price labels. A Kohl's spokeswoman declined to say how many digital signs the company uses or how much labor they save. Nor would she comment about the legibility of the text on the LCD screen. In one Kohl's store, I found the LCD signs impossible to read from an angle.

Mr. Saxena of Altierre says the LCD displays at Kohl's serve a limited purpose, providing prices once a customer is drawn to a particular item. Attracting the customer is the responsibility of colorful paper signs that accompany each of the LCD rectangles. These call out "Sale" or other messages and can easily be seen from far away.

Digital tags look best when they remain small and are modest in their ambitions, like in a grocery store, where they are spared the burden of trying to be the visual equal of color on paper. Seeing thousands of them on shelves seems rather strange at first glance. But not so much at the second. After the third, paper price tags look as quaint as a rotary-dial telephone.

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross@nytimes.com.

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This article originally appeared in The New York Times.


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