Electronic labeling: the best guarantee of accurate pricing according to a survey by the DGCCRF

Paris, July 9th, 2012 - French firm Store Electronic Systems, the world's leading supplier of electronic labeling solutions for the retail sector, has jumped at the chance to promote electronic shelf labels (ESLs) as the best guarantee of price integrity between shelf edge and POS scanner, following the publication - on July 5th 2012 - of a DGCCRF survey on pricing errors in supermarkets. The added value provided by ESLs is evidenced by their increasingly widespread use in the retail sector and by the steady growth in sales at Store Electronic Systems (+30% for 2011 and the first quarter of 2012).

A DGCCRF report highlights the problem of price differences between POS scanners and the shelf edge

Further to a survey of 1269 large and medium-sized retailers, the purpose of which was to verify that prices displayed at the shelf edge match those scanned at the checkout, the DGCCRF has reported pricing errors in 54% of the stores investigated, involving 7% of the items for sale. The DGCCRF also pointed out that these figures have remained relatively unchanged since the previous survey in 2008, which revealed errors in 52% of the stores investigated, involving 7.5% of the items for sale.

While these figures are certainly alarming, they have to be brought into perspective. According to the specialists at Store Electronic Systems, these pricing errors are largely due to the continued use of paper price labels in many supermarkets. Thousands of paper price labels are updated manually every day, which is an inevitable source of error and delay. As Thierry Gadou, CEO of Store Electronic Systems, points out, "the potential for error increases with the frequency of price changes, which has doubled in the last 10 years under the effect of growing competition in France. Nowadays, supermarkets change thousands of prices every week. So, in our opinion, the relative stability in the error rate - as revealed by the DGCCRF survey - reflects an improvement in the situation, considering the growing frequency of price changes."

Electronic labeling: a means of guaranteeing price integrity and preventing errors due to manual price label management

Electronic labeling technology automates the price changing process. Prices are updated in real time,
via a radio signal transmitted from the central information system to the electronic shelf labels. Each time a price is changed, the transmitting system sends the new price to the electronic label so that the price displayed at the shelf edge matches that scanned at the checkout. The SES solution dramatically reduces human error while giving in-store staff more time to spend on higher added value work. "From what we have observed," says Pierre Demoures, Sales Manager in France and a member of the SES Board of Directors, "the pricing error rate in stores that are not equipped with electronic labeling technology often exceeds 7% or even 10%. Once they have installed electronic labels, this rate drops by 60 to 90%. Some sources of error may persist (broken equipment, breakdowns), but the strength of SES lies in its reliability, which has been tried and tested for 20 years,
and its unrivalled level of investment in R&D. Our system has been installed in over 5,000 hypermarkets and supermarkets across 47 countries, and we are proud that a French SME is leading the world in such a promising sector."

The installation rate has risen substantially over the last 5 years, but is still inadequate

In a bid to increase their competitiveness and build a strong price reputation among shoppers, more and more hypermarkets and supermarkets are investing in electronic labeling solutions. Hence, the number of stores equipped by French firm and market leader SES has increased by 136% in 5 years, reaching over 3,000 at the end of June 2012. And the pace is picking up: “We have been installing our system in 1 or 2 stores every day since the start of the year,” says Pierre Demoures.

However, taking all the large stores in France into account, the overall installation rate remains below 50%, which is still not enough, especially at a time when competition is stepping up. Thierry Gadou stresses the risk of a two-speed retail sector: “The stability of the error rate between 2008 and 2011 conceals the improvements brought about by the installation of electronic labels in some stores, on account of growing disparities. Over the next few years, we may see a growing gap between stores that have an electronic labeling system and are therefore in a better position to withstand competition and satisfy their customers, and stores that still use paper price labels and are struggling to keep up with frequent price changes.”

Electronic labels not only ensure price integrity, but also low prices

Price positioning and competitiveness are the most powerful levers of performance in the food retail sector, as demonstrated every year by the correlation between price and market share. Therefore, efficient price management is an important strategic challenge.

In this respect, the 2011 performance of SES’s “Top Clients” - i.e. brands that have installed the SES solution in over half of their stores in France - sends out a very clear message: these brands are cheaper (2% on average) and more successful (a 2%-plus increase in market share in 2011). 

“Year after year, Store Electronic Systems proves itself to be an effective partner to successful brands, for the benefit of both shoppers and their purchasing power. Our electronic labels do not just guarantee price integrity but also low prices, which is better still” concludes Thierry Gadou.

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About Store Electronic Systems: Store Electronic Systems is the worldwide leader in Electronic Shelf Labeling systems (ESL) for large-scale food and non-food retailers. The company designs, markets and installs all the system's components (software and communication platform, displays, mounts), thus providing clients with a turnkey solution. The range of products and services offered by SES allows retailers to manage pricing dynamically, while significantly improving store productivity.

Store Electronic Systems is listed on Compartment C of EuronextTM Paris.

Mnemo: SESL - ISIN code: FR0010282822 - Reuters: SESL.PA - Bloomberg: SESL.FP

www.store-electronic-systems.com

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