Muda at the Market

Recently, during one of my many adventures across the internet, I stumbled across a photo that struck me. It depicts an aisle of a U.S. drugstore, where nearly every single product facing has a tag on it announcing a price and a limited-time promotion. The entire row is covered with bright yellow tags, begging anybody passing to see what the fuss is about. However, my only thought (and others’, too, judging by the top comments on the post this picture was featured in), was, “I would hate to have been the one to put all those tags up.”

It’s a common sight. Many drugstores, grocery stores, and big box chains use this tactic to communicate not only new sales, but also everyday prices that they claim are lower than the competition. I reached out to a friend who, once upon a time, worked at one of these grocery stores, where his responsibilities included adjusting  pricing displays.

“We had a machine in the back office to print up the price tags,” my friend recalled. “Just monstrous rolls of paper being printed to show the regular price, sales, clearance offers, etc. Sometimes that’s all I was there for. Especially when the monthly sales came up. I’d spend the whole week going in early to print and hang price sale tags. There were times when ‘new’ weekly sales came up, but it was the same exact price as before, just a different date on the sticker.”

That’s a whole week, once a month, of an employee doing one single task—sometimes with no value added, in the cases of duplicate prices. Not just a waste of the employee’s potential and the store’s productivity, but a morale killer for the worker. Now, I don’t work in the retail industry and don’t claim to be an expert on the inner workings of it, but there must be a better way to maximize employee time while still conveying the latest prices and sales.

I started paying close attention to the way retail stores displayed their prices and sales, finding basically the same uniform systems everywhere I went, just with different color schemes, flashy graphics, and varying font sizes. Each place had one thing in common, though: Someone had to put all those price tags up.

Then, I landed in a Kohl’s department store.

Nearly every fixture inside Kohl’s has a mounted digital display that outlines the price of everything on the shelf; it even shows the price difference for things that are marked down based on original price. For example, if a shelf contains four items, each at a different price, and the entire shelf is part of a 40-percent off sale, you’ll find the individual new price for each item on one digital display. No tag-hanging needed at 5 a.m. by a team of tired employees who have to change the sales tags before the store opens.

Aside from the obvious benefit of freeing up employees’ time to assign them to other, more useful tasks, these digital displays have other benefits. Incorrect display pricing can lead to huge losses if they add up, but if a retailer has a digital display that is connected to the same inventory as the point-of-sale system, the chance of mismatched prices drops dramatically. Digital displays can’t be tampered with by customers, and there’s no risk of having an employee fall behind and not change the prices in time for opening. These particular displays are updated in real time from a central location, covering multiple stores, with adjustments to match competitors’ prices. In fact, in the United States, competitor-price matching seems to be the key motivator for the digital investment.

The emergence of smartphones has led to a new trend for shoppers, called “showrooming,” where potential customers scour the internet for better prices on items found in a store while they browse. Digital displays are, in part, an attempt to curb that behavior, encouraging customers to feel as though the digital price is up-to-the-minute and the best deal. Whether that works or not is debatable, but some evidence can be found by looking at European chains that have already made the switch to digital during the last decade. According to Bloomberg, Placer’s saw its sales triple during the first quarter compared to the previous year, prior to installing the displays.

Kohl’s is a great example of a different way to do price displays in a retail environment with success on multiple fronts, but I’m still not satisfied with my search. That solution works for Kohl’s, but might not be ideal for companies with a much bigger inventory, such as drugstores or grocery stores.

Enter REMA 1000, a chain based out of Oslo, Norway, that features a digital display for every product facing.

Displays like this often use RFID-chipped products that communicate with the display, instantly identifying the product to display with a specific price. Other displays are pre-set based on a store’s layout. REMA 1000 is one of many European chains that has adopted digital price displays during the last 10 years, seeing the benefit of up-to-the-minute pricing and saved time for employees as a no-brainer. These types of displays are another great solution, but not one that is able to immediately call out great sales in the way we are used to. Apparently, so far, nothing says “sale” quite like 500 individual yellow tags hanging off the racks.

Hoping to find the most high-tech display system in existence, one that could both show up-to-the-second pricing without wasting employee time and communicate a great deal to the customer at a glance, I turned to a company that is obsessed with over-the-top, high-tech solutions, some that one might argue are solutions to problems that no one has complained about (yet). Of course, I’m talking about Amazon, the company that will:
• Deliver packages via drones (and eventually maybe fly an entire warehouse around)
• Email you the second your package is placed on your porch
• Replenish your toilet paper and dishwashing detergent after you simply push a button mounted in your house
• Tell you current weather conditions (as long as it can understand you)
• And soon, allow you to grocery shop without ever standing in line or checking out

Amazon Go, a retail store launching in early 2017 in Seattle, allows shoppers to use their mobile device to “log in” to the store when they enter. From there, shoppers simply pick up items they want, and a complicated combination of sensors, machine learning, and artificial intelligence will detect where they are, what they picked up (and if they put it back), and how much to charge them as they walk out—without ever engaging an employee.

Upon hearing about this project, I was convinced I would see the price-tag solution of my dreams on display, so I eagerly launched Amazon’s announcement video for the store:

Did you catch that?

Traditional displays. Not only that, but early in the video you can see an employee moving a product, and then adjusting the price-tag....

I guess they have to do something in there.

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