Shelf tags are becoming an increasingly important component of reducing out-of-stocks and providing a better customer service experience.
By Pat Pape, Contributing Editor
Before heading to his neighborhood gym, Terrance Stewart of Fort Worth, Texas, stopped at a local convenience store to pick up an energy drink. He selected his favorite from the cooler and headed toward the sales counter. While passing a display of energy bars, a popular brand caught his eye. He hadn’t planned to buy one, but it would be a good treat later, he thought.
On the shelf below the energy bars were several price labels. The label underneath and to the right of Terrance’s favorite read “$3.19.” The one to the left read “$3.89.” There was no price label directly under the brand. Because he didn’t want to pay $3.89 or yell a question across the store, Terrance decided to purchase the beverage alone.
This scenario is not uncommon. Shelf tags let customers to know the selling price of a product and allow them to do their own comparison shopping. Customers, who are frustrated when they don’t know the retail price of an item, will often pass it up.
Tag, You’re It
Shelf tags are not a sexy topic. But when it comes to convenience stores, those little pieces of paper provide vital information to many people—the customer, the store operator and the store’s wholesaler.
“They sit on the shelf in front of the product, and give the retail price and the order number for the wholesaler,” said Andrea Myers, executive vice president of Kocolene Marketing, which operates 11 Fast Max convenience stores in Indiana and Kentucky, and 18 Smokers Host Discount Tobacco stores in Indiana.
Kocolene is a client of Eby-Brown, the tobacco, candy and convenience distributor based in Naperville, Ill. As it does for other clients, Eby-Brown provides Kocolene with printed shelf tags for each SKU, along with a hand-held device that reads the tags and helps create an order.
The chain’s shelf tags provide even more than basic product information that store operators need. They can tell whether the wholesaler will take the SKU back if the store wants to return it, and they can reveal if the SKU represents a single item or a case of multiple items.
That last bit of information is especially critical to the sales associate preparing an order. “Let’s say you want to order kitty litter and you order a single item and receive six bags,” said Robert Perkins, vice president for marketing at Rutter’s, the York, Pa.-based chain with 60 locations. “Hopefully, you don’t have a store that orders three units of kitty litter and ends up with 18 bags.”
Whenever a new item is added to the store, a new shelf tag must be printed. And when a retail price changes, the shelf tag must change too.
“When we get a price change, we change it in our price book system and also in our wholesale system,” said Myers. “Then Eby-Brown sends out new shelf tags. It’s more convenient for us [to print them], and it’s less costly. But there is a time delay.”
When faced with a price change and while the new shelf tag is in the mail, “we’ll have the store manager use a label gun and cover the old shelf tag with the new price,” Myers said. “When the new tag arrives, they’ll stick it up there.”
Some convenience chains have purchased or developed their own technology so they can print shelf tags in every store. Kocolene executives occasionally talk about making that investment, but so far, Myers said, the cost always causes them to reconsider.
Rutter’s upgraded its system three years ago, installing a PDI handheld device in every store.
“We utilize the back-office printer for shelf tags so that as prices change or products are added, employees can do all the printing right there in the store,” Perkins said.
Despite the convenience of printing the tags on site, the system’s greatest advantage was the enhanced ease of ordering. “It’s helped us immensely,” Perkins said.
Michael Zielinski, a director with the Royal Buying Group of Lisle, Ill., encourages convenience store members of the organization—many of them small convenience chains—to work with their wholesalers to tackle shelf tag challenges.
“The tags are for the consumer, but they’re also for reorders,” said Zielinski. “Retailers today are using a handheld to place orders automatically. Most wholesale grocers don’t send a representative out on a regular basis anymore because of the cost involved.”
He believes that continuing to use the old systems—which functioned adequately before technology changed the game—can be a disadvantage in today’s competitive environment.
“Today, you really need a back-office system to identify sales trends in your store,” Zielinski said. “As a retailer, you don’t want to have out-of-stocks because that will drive your customers away. The old build-up sheets, as they used to be called, just aren’t efficient enough. You need to stay current with technology.”
Like Eby-Brown, McLane, a grocery and foodservice wholesaler based in Temple, Texas, offers retail customers a hand-held device and a shelf tag service that prints the tags in two sizes and a wide range colors. The company’s proprietary technology was developed for the retail industry six years ago. Deon Johnson, director of customer facing solutions for McLane, doesn’t understand why everyone doesn’t use it.
“A lot of companies rely on us to provide that solution,” he said. “Others spend a lot of money to build their own solution when they could easily take that money and open additional stores instead.”
Got Shelf Tags?
Despite the obvious arguments for using shelf tags, there remain a few retail holdouts in the c-store industry that don’t use them at all. In contrast, other stores, such as Whole Foods and larger grocers, have adopted electronic shelf tags that are pricey to purchase but can be used to change prices automatically based on what’s in the store’s point-of-sale system.
“This is an industry situation that has been going on for years,” said Johnson. “It’s one of those things that people have different opinions about, whether it is the right thing to do and what are the right colors to use. Everybody has the problem.”
As for Myers, she sees the little tags as an often ignored example of good customer service and is determined to keep her shelves looking sharp.
“Its very important to us for every item to be priced with the tags,” she said. “We do store resets once a year, and that’s when every store gets all new tags. I like the clean look, and we owe it to the customer to let them know what items cost.”
How to Use Shelf Tags Effectively
• Post the accurate price for every SKU on the shelves.
• Put the correct price on the tag nearest the appropriate SKU.
• Use shelf tags to identify and correct out-of-stock situations.
• Regularly check shelf tags and replace those that are worn.
• Clearly label products that SNAP eligible.