E-labelling to ‘revolutionise’ shopping in Germany

DPADusseldorf, GermanyElectronic shelf labels are still a rarity in German supermarkets, but retail experts think they will eventually become a familiar part of the shopping experience.That could lead to a sea change in how Germans shop and it could make product pricing much more variable than it is now.Germany’s second biggest supermarket chain, Rewe, and the consumer electronics chains Media Markt and Saturn are leading the way in electronic labelling.Another supermarket chain, Edeka, has electronic labelling in some of its stores, and according to German retail trade journal Lebensmittelzeitung, several discount chains are testing the technology now.Rewe has converted 500 of its 3,300 stores and installed over 7mn electronic shelf labels. In future, as the company renovates old stores and opens new ones, it will introduce the technology to more of its outlets.According to the company’s spokesman, Rewe expects to achieve greater efficiency with the labelling system. At the moment employees have to update hundreds of paper price labels every week in each of its supermarkets. That’s not only a time-consuming task, but frequently leads to mistakes and customers demanding products at the cheaperprice.Marketing analyst Martin Fassnacht from the WHU school of business management thinks the spread of electronic shelf labels will have even bigger affects on the shopping lifestyle.“The first step will probably be that supermarkets will lower their prices during the times of the day when there are fewer customers around, just like airlines do,” he says. Supermarkets will also drop the prices of perishable goods like fruit and vegetables to encourage buyers to clear shelves late in the day.But Fassnacht admits it will mean a learning curve for customers.“Prices that vary across the course of the day will take some getting used to. Shoppers are not familiar with this concept in the food retail sector.”Fassnacht thinks it will take some time for electronic labelling to become fully effective. “If it’s done intelligently, customers will perceive it as a fair development.”Germans are easily upset at perceptions of price gouging, so while it is theoretically possible that supermarket chains might increase prices before a rush of demand, such as raising the price of beer ahead of a big football match, the idea could lead to ugly conflicts.“I don’t think they will do that in a big way. The competition is too aggressive for that in German retail and there’s a danger that it would anger customers,” agrees Fassnacht.Cetin Azar from the EHI Retail Institute also thinks that could be a recipe for trouble.“It’s no problem to drop prices, but raising prices during the day would be very difficult.”  Rewe has already ruled out introducing repeated price variations during opening hours. Media Markt and Saturn have been very careful in how they use electronic labelling in their appliance stores. Both chains have introduced the technology on a big scale in their Dutch stores, but neither company varies prices during opening times. At the moment, just four of their stores in Germany have electronic shelf labelling but more are due to follow.Fassnacht thinks the labelling system could lead to an even bigger revolution in sales strategies. “Anyone who installs a supermarket’s smartphone app might be notified while shopping of an even cheaper product that other customers don’t know about.”That would allow stores to individually tailor pricing in a way they can only dream of today.