How the Bluetooth ESL Standard Aims to Replace Billions of Retail Paper Labels

As we peek into the world of retail, a transformation is in the air. This change is driven by the need for retailers to adopt smart technologies. Why? Two words: staying competitive. Plus, research by Nikolas and his team is clear—smart technologies are a hit with Generation Z consumers.

A key player in this tech-driven makeover is the Electronic Shelf Label or ESL. These digital price tags are replacing the old-fashioned paper ones. The benefits? They provide real-time updates on pricing and more product information, among other things.

But here's the twist. ABI Research throws light on a surprising gap. With tens of billions of paper labels across the globe, there were only about 788 million ESLs at the end of 2022. The market penetration of ESLs isn't as impressive as we'd expect.

The question then is: Why the lag in ESL adoption? And here's another intriguing part: How is the new Bluetooth ESL standard stepping in to tackle the challenge? 

 

An example of an ESL. Image used courtesy of Freshwater Digital

 

Understanding Electronic Shelf Labels (ESL)

Let's start with the concept of smart retail. Simply put, smart retail involves using innovative technologies like AI, IoT, and data analytics to improve the way retailers manage their businesses and engage with customers. 

It's about leveraging digital advancements to bring about more efficiency, convenience, and personalized experiences to both shoppers and retailers.

Traditional retail relies heavily on paper labels, which display basic product information like price, name, and maybe a bar code. They've been around as long as retail itself and are integral to the shopping process. 

But there's a catch: They're static and manually updating them is time-consuming and prone to human error.

Smart retail uses Electronic Shelf Labels (ESL). These digital, battery-powered and wirelessly updated price tags are here to revolutionize the retail game. No longer do store associates need to manually change labels when prices shift or new stock comes in. The ESL system does it automatically, reducing errors and freeing up time for the employees to engage in higher-value tasks.

One notable example of ESL in action is at the retail giant, Walmart. The company is implementing ESL in over 500 stores, covering more than 60 million products. The result? Real-time price accuracy, reduced labor costs, and enhanced customer experience as customers could now trust they were seeing the most current price.

But the benefits of ESL go beyond time and cost savings. ESL can also offer: 

• Dynamic Pricing:  With ESLs, retailers can implement demand-based pricing where prices change based on demand, time, or other factors. For instance, a grocery store could automatically reduce the prices of perishable goods nearing their sell-by date, minimizing waste.
• Keeping Up with Regulations: For countries juggling multiple currencies or transitioning to a new one like, ESLs are godsend. They make it easy to change prices and stay updated with the latest financial rules and trends. 
• Boosting Product Transparency: Besides price, ESLs can relay a plethora of additional product data, including stock details, customer reviews, and even allergen or nutritional facts.

Yet, despite these advantages, there's a hitch. ABI Research highlights a startling contrast.

 

Insights from ABI Research

According to the tech market advisory firm ABI Research, the adoption of Electronic Shelf Labels (ESL) across the global retail sector, while promising, is not quite keeping up with expectations. 

By the end of 2022, an estimated 788 million units of ESLs were installed globally. This figure might seem substantial at first, but in the face of tens of billions of traditional paper labels still in circulation, the impact of ESLs is somewhat diluted.

The question that arises then is: Why isn't the adoption of ESL technology more widespread, given its evident benefits?

• Market Fragmentation: The ESL market is currently saturated with a multitude of incompatible solutions from different manufacturers, each operating with their proprietary systems. This lack of a unifying standard complicates matters for retailers, often leading to vendor lock-in scenarios that impact interoperability and flexibility.
• Limited Support for Long-term Retail Strategy: Retailers need technologies that not only address their immediate operational needs but also align with their long-term strategic goals. With ESL and retail IoT technologies still evolving, some retailers hesitate to invest for fear of their chosen technology becoming obsolete or the emergence of better solutions down the line. This concern can delay adoption decisions.
• Complexity and Lack of Understanding: Many retailers lack a comprehensive understanding of ESL technology. They may be unfamiliar with the full range of benefits offered by ESLs or find the deployment and maintenance process intimidating. Education and clear, simple communication about ESL solutions could go a long way in overcoming this barrier.

All these obstacles highlight the pressing need for a standardized approach to ESL implementation. The Bluetooth ESL standard could be the answer to this clarion call.

 

A tablet or smartphone communicating with an ESL using Bluetooth LE technology. Image source: Tradew

 

The Arrival of Bluetooth ESL Standard

The current landscape of the Electronic Shelf Labels (ESL) market has clearly signaled the need for a standardized solution, and this is where the Bluetooth ESL standard comes in.

Announced by the Bluetooth SIG last year, the ESL standard was developed as part of the feature enhancements introduced in the Bluetooth Core Specification Version 5.4. The Bluetooth ESL profile aims to bridge the gap caused by market fragmentation. It offers a uniform and interoperable solution that can be adopted by various manufacturers, thus reducing the risk of vendor lock-in and the associated challenges.

Furthermore, the Bluetooth ESL standard introduces a flexible and scalable architecture that supports future enhancements and features. This future-proof design reassures retailers about their investment in the technology, easing concerns about obsolescence and promising better alignment with their long-term retail strategies.

 

Example of ESL presenting information consistently with an online store. Image used courtesy of Joe Boden,Erik Maier, and Florian Dost

 

Consumer Reactions and Store Impact to ESL

The introduction of Electronic Shelf Labels in retail stores has positive implications for both retailers and consumers, as highlighted in recent research studies.

One study shows that ESLs positively impact store revenue without affecting visitor numbers. They seem to increase purchase probability by offering a consistent and integrated presentation of price and product information across online and offline channels. This consistency helps deter showrooming, a shopping behavior where customers compare online prices while in brick-and-mortar stores.

Additionally, an internal revenue shift was noted in stores with both ESL and non-ESL categories. Consumers were observed to switch their purchases from non-ESL to ESL categories, likely due to the more attractive and clearer presentation offered by the electronic labels. This shift, however, indicates that ESLs might draw attention away from non-ESL categories.

Another study found that shoppers perceive ESLs as easy to use and that their presence positively influences perceptions of product quality and overall store image. However, most consumers remain unaware of the full advantages of ESLs, indicating a need for retailers to better communicate the benefits of this technology.

 

Annual ESL shipments by technology. Image used courtesy of ABI Research

 

Bluetooth's Future in the ESL Market

The prediction is that the adoption of the ESL will surge in the years ahead, as both current Bluetooth vendors and newcomers alike embrace the Bluetooth ESL standard. 

A study by ABI Research shows that by 2028, there could be up to 117 million Bluetooth ESL devices being made each year. This is a big jump from the 16 million devices made in 2021.

If you want to learn more about Bluetooth ESL predictions, check out this market study by ABI Research.