Digital Shelf Labels
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Digital shelf labels at a glance:
Digital shelf labels replace paper tags with a digital display, allowing retailers to make routine price adjustments more quickly and accurately than with paper tags.
Policymakers at the federal and state levels are considering proposals that would restrict digital shelf labels and other modern pricing technologies.
The National Retail Federation supports retailers' ability to adopt digital shelf labels and other technologies that improve efficiency, accuracy and the customer experience.
Policymakers should avoid restrictions based on misconceptions about how digital shelf labels work. Existing federal and state consumer protection laws remain fully applicable regardless of whether a retailer uses a paper label or a digital one.
What are digital shelf labels?
Digital shelf labels (DSLs), sometimes called electronic shelf labels, are a modern alternative to traditional paper price tags on retail shelves. They allow retailers to display and update their prices digitally rather than relying on employees to manually print, replace and verify thousands of paper labels throughout a store.
Adopting this technology allows retailers to improve price accuracy, reduces paper waste and frees employees from repetitive label changes to better serve customers. DSLs also make it easier to quickly mark down perishable or seasonal products, helping retailers reduce food and inventory waste while giving consumers more opportunities to save. Additional technology features enable employees and customers to locate products easier through flashing displays and can also alert customers to potential allergens in food, health and beauty products.
Digital shelf labels are sometimes mischaracterized as tools designed to enable “surge pricing” to raise prices on individual consumers in real time. But changing how a price is displayed does not change the fundamentals of how retailers determine prices, nor their obligation to comply with consumer protection laws.
Retailers have always adjusted prices to respond to changes in costs, competition, inventory and consumer demand. Digital shelf labels simply replace the paper tag with a digital display, allowing retailers to make those routine changes more accurately and deftly.
A digital shelf label is a visual display tool, not a pricing decision-maker.
Digital shelf labels help retailers update prices quickly and accurately while reducing surprises at checkout. Learn how this technology works and what it means for shoppers.
How digital shelf labels work
Digital shelf labels are small electronic displays, usually using e-ink screens like those used in e-readers. They display the same product price to every shopper and communicate prices established through a retailer's existing pricing systems. The labels do not independently set prices or make pricing decisions.
A typical system works in three steps:
The retailer’s pricing team sets or updates a price in the store’s central pricing system, the same system that governs the checkout register.
The update is initiated by store employees and transmitted wirelessly to the shelf label.
The label displays the new price, keeping the shelf and the register in sync.
Digital displays are already familiar to consumers from gas station signs, drive-through menus and digital menu boards at coffee shops. Digital shelf labels bring similar technology to retail store shelves, replacing paper tags with electronic displays that can be updated more efficiently.
Importantly, displaying a product’s price does not involve tracking individual shoppers or collecting their personal information. Electronic shelf labels are price display tools, they do not use observational tools such as cameras or devices designed to track customers in real-time.
Why digital shelf labels matter to retailers and consumers
Retail stores can carry tens of thousands of individual products, each of which may require employees to manually print, locate and replace a paper price tag when a price or promotion changes. Digital shelf labels streamline that process by allowing authorized price updates to be reflected directly on the shelf, delivering several benefits:
Digital updates improve price accuracy by reducing the potential for mistakes associated with manually printing, replacing and verifying paper labels.
By reducing repetitive administrative tasks, DSLs give employees more time to focus their attention on customer service and other in-store responsibilities.
Electronic displays eliminate the paper associated with printing and replacing traditional price tags, reducing waste and advancing retailers' sustainability priorities.
Retailers can more efficiently mark down perishable products approaching their sell-by dates, making it easier to offer discounts before products spoil and limiting food waste.
Digital displays help retailers respond to changing market conditions without the delays associated with manually changing thousands of labels.
Digital shelf labels can flash to assist employees and customers with locating products, while certain applications can provide alerts about potential allergens in product ingredients.
These efficiencies matter to consumers. Retail is a highly competitive, low-margin industry, and technologies that reduce operating costs and waste allow retailers to deliver greater value while improving the overall shopping experience and maintaining competitive prices.
A digital price tag is still a price tag
The transition from paper shelf labels to electronic ones does not eliminate existing consumer protections. Federal and state laws already govern deceptive practices, truthful advertising, accurate pricing, discrimination and anticompetitive conduct, regardless of how a price is displayed.
As NRF notes in its broader discussion of data-driven retail pricing, retailers' use of modern pricing technology does not exempt them from existing legal obligations or diminish consumer protections. A price displayed electronically is subject to the same applicable consumer protection laws as one displayed on a traditional paper tag.
Why restrictions could hurt consumers
Policymakers at the federal and state levels are considering proposals that would restrict digital shelf labels and other modern pricing technologies. While often framed as consumer protection measures, broad restrictions or vaguely worded disclosure requirements could make it harder for retailers to efficiently mark down products, respond to seasonal trends and evolving consumer demand, and improve the shopping experience.
Rules targeting this technology risk creating unnecessary compliance costs. They could also discourage investments in tools that improve pricing accuracy, reduce waste and make stores operate more efficiently.
For example, restricting retailers' ability to update digital shelf labels could make it more difficult to quickly discount perishable products before they spoil. Requirements that complicate routine price updates could also undermine the efficiencies that help retailers maintain accurate shelf prices and compete on price.
The better approach is to distinguish between technology and conduct. Policymakers should enforce laws prohibiting deceptive, discriminatory or anticompetitive conduct without restricting legitimate tools simply because they allow retailers to operate more effectively.
NRF's position on digital shelf labels
The National Retail Federation supports retailers' ability to adopt digital shelf labels and other technologies that improve efficiency, accuracy and the customer experience.
Policymakers should avoid restrictions based on misconceptions about how digital shelf labels work. Existing federal and state laws remain fully applicable regardless of whether a retailer uses a paper label or a digital one.
Retailers compete every day on price, convenience, service and selection. Digital shelf labels are another tool that enable retailers to compete more efficiently while giving consumers the accurate, timely pricing information they expect.
Dig deeper into digital shelf labels
Digital shelf labels are a modern tool to meet the needs, expectations and demands of modern shoppers. Explore some of the most common questions about what the technology does and doesn’t do, its impact on pricing, and the benefits it offers retailers and consumers.
Can DSLs change prices based on what’s in my shopping cart?
No, digital shelf labels cannot change prices based on items in each and every customer’s shopping cart. Instead, DSLs display prices determined through a retailer’s existing pricing systems, and every shopper sees the same price for a given product on the shelf, regardless of the weather, time of day, who is standing in front of the shelf, or what is in their cart.
Can retailers use digital shelf labels to adjust prices based on personal information, like the size of my household or other identifying factors?
Digital shelf labels do not independently determine or adjust prices based on a customer's personal information. Replacing a paper price tag with an electronic display changes how pricing information gets to the shelf, not how prices are determined. The labels themselves do not identify individual shoppers or use information about a customer's household, shopping habits or other personal characteristics to change the displayed price.
Independent research examining a major grocery retailer’s adoption of DSL technology found no evidence of surge pricing or price gouging after implementation.
Are patents for new retail technologies evidence of retailers' plans to charge customers differing prices?
No. Patent applications describe potential technologies or solutions and their possible applications. They do not establish that a particular technology has been developed, deployed or adopted by a retailer.
The existence of a patent or patent application for new technologies does not prove that a retailer is pursuing practices that would result in consumers being charged different amounts for the same products. An invention’s potential capabilities are not evidence of how it is actually being used, or how a retailer intends to use it.
Digital shelf labels display prices determined through retailers’ existing pricing systems and their adoption does not, by itself or in conjunction with undeployed patented technology, change how retailers make pricing decisions or the consumer protections laws that govern them.
Why are retailers adopting digital shelf labels?
Retailers are adopting DSLs for practical reasons: to improve pricing accuracy, reduce employees’ time spent manually changing paper labels, minimize paper waste, and make it easier to mark down prices to respond to competition. These efficiencies also allow employees to dedicate more time to assisting customers.
As consumers increasingly seek convenience, efficiency and better deals, retailers have evolved their in-store and online shopping experiences to meet those expectations.
While these devices may be relatively new to consumers in the United States, they are already widely used in international markets. European grocers, in particular, have adopted the technology over the past two decades, with roughly 80% of grocers across the continent reportedly using digital shelf labels.
Retailers exist in a vastly competitive marketplace, where consumers have tremendous choices in price, quality and experience. Online competitors from around the globe also bring tremendous pricing pressure to U.S. retailers. With more than 600,000 different retail companies in the U.S., competition drives businesses to develop innovative solutions that deliver low and fair prices.
Just as when barcode scanners modernized checkout and self-checkout gave customers another way to complete their purchases, digital shelf labels are another tool retailers can use to raise both operational efficiency and customer satisfaction.
When retailers compete, consumers win.