Walmart Did Not Put Digital Shelf Labels On The Map

When it comes to using automation in retail operations, Walmart has long been a leader. They were an early adopter of the barcode and the standardization of the Universal Product Code (UPC) that was the key to making the barcode ubiquitous. And researchers widely credit Walmart’s adoption with starting the shift in the balance of power between manufacturers and retailers (The article link is to a write-up of a Frontline episode from 2004 that featured Walmart and looks ahead to RFID at the time, which is an interesting flashback all by itself). As the leader in driving that shift, Walmart’s own rise was almost inevitable.

Walmart tried to put a similar stake in the ground with RFID in the 2003-2004 timeframe. I worked for a supply chain exception management software company at the time, and RFID + SCEM actually held a lot of possibility, especially considering the enormous amount of data that RFID would generate vs. only the exceptions from expectations as the only thing that people actually cared about.

However, Walmart wanted to focus RFID upstream in the supply chain – inbound, and then outbound to stores. At the time, there were big constraints that basically forced that focus area – tags were expensive and the basic physics of metal cans, metal shelves, and lots of liquids made in-store reads very unreliable (those physics haven’t changed, by the way). Tags slapped on cardboard boxes, however, were cheaper, easier, and more reliable. The problem was, the business case wasn’t in a better license plate. It was in in-store inventory accuracy. In its own way, Walmart actually ended up delaying the progression of RFID by setting mandates that forced manufacturers to push back heavily. The business case wasn’t there, and no one was happy to invest for “do it now so that maybe we can get to benefits later”, especially when the costs to implement were still very high – and that doesn’t even count labor costs.

In the meantime, it wasn’t even clear that RFID was the right solution to in-store inventory, especially in those challenging physics environments. We’re still only on the cusp of RFID becoming a standard expectation for the fashion industry. And even in an environment of much less dense products, few if any liquids, and very little metal, fashion still has to deal with physics issues, like figuring out if a product is in the back room or on the sales floor because of bleed-over reads through walls.

But, regardless, Walmart was very early into RFID, and to their credit, continued to work to refine in-store inventory tracking both with RFID (little sponge-y cushions on the tags to remove the antenna from a metal can, anyone?) and with alternatives, like camera-vision robots doing the “Roomba” through stores.

The Digital Shelf Labels Era

Walmart has now announced that they are going to roll out digital shelf labels (DSL’s) to 2,300 stores by 2026. I was first introduced to DSL’s – back then, we called them “electronic shelf labels” or ESLs, and you might still find places that refer to them like that. In the omnichannel age, where in-store technology strategy is focused on trying to bring more digital influence into stores, I guess it makes sense to update the term.

When they were first introduced, like with RFID there were some cost challenges. The DSLs of the time were pretty clunky with a wide band around the screen. And think more Kindle reader kind of experience than tablet – it was digital paper, basically, that could be updated remotely. You could get color for a lot more money, and you could potentially make it do things like flash between colors to try to get the shopper’s attention, but that then drained the battery life.

Oh yes, and there was no consensus on how to power them. Batteries came first, mostly because no one wanted to ask a retailer to run power to every shelf on every four-foot section of a grocery store, and then there was the whole question of what to do in refrigerated sections.

DSLs Still Have Constraints

A lot of those challenges have been solved. The devices have become cheaper, there are more options to power them, and real screens – even touch screens – have become much, much cheaper. The devices can come with a whole array of options for interactivity even without touch. The resolution has evolved to where you can display a QR code on the screen, which consumers can scan with their own phones. Or you can use NFC or Bluetooth to connect.

And what consumers can do is much greater as well, given that connectivity. Walmart in particular has invested a lot in their consumer mobile app, with one of the better plays on in-store mode as well. This makes it easier to offload a lot of the work that the industry originally assumed the label would have to do – offload it right onto the consumer phone.

However, there are still a lot of operational challenges for deploying DSL’s, especially in a grocery environment. You need very high display compliance. The right sign has to be underneath the right product. And you have to provide escape hatches for stores. Sometimes shipments get lost or damaged, and sometimes it just looks way better to pull the tag for the item that’s missing and fill it with something else, than it is to leave a hole that’s not going to be filled.

You also still need to monitor those DSL’s very closely. Has one been moved? Why? Is it where it needs…