Following the growth of retail outlets, the demand for retail digital equipment and devices, such as electronic shelf labels, self-checking robots, and self-checkout terminals has increased. These technologies have helped retailers to boost their profit margins and serve customers better while offering a premium shopping experience.
Amongst all retail store technologies, the electronic shelf label stands out. The electronic shelf label market size is valued at $980 Million in 2022 and is expected to reach $5.2 Billion by 2032 with a Compound Annual Growth Rate (CAGR) of 18.3%. The growth of this novel technology will be immense in the coming years, meaning that every professional electronic shelf label supplier will be in high demand and make great profits.
Overview of Electronic Shelf Label and its Development
Electronic shelf label (ESL), also known as the digital price tag is a digital wireless display system used in retail stores to show product prices in order to ease store management and help customers make an informed buying decision. Digital shelf labels are installed at the front edge of retail shelves and connected to the Point of sales (POS) and Enterprise Resource Planning (ERP) systems.
Over the years, the electronic shelf label market has been growing fast. And this is major because of the benefits the technology provides, as well as its cost-efficiency and low time-consumption of updating product information. This allows for a reduction in labor costs, improved pricing accuracy, and dynamic pricing. In addition, guaranteed operational efficiency with real-time product positioning has contributed to its growth. However, the market is faced with high infrastructure and installation costs.
Another set of influences on the growth of the electronic shelf label market is the increasing proliferation of the Internet of Things (IoT) and the growing digitization of the retail sector. The continuous growth in the retail sector has led to a meteoric expansion of retail stores, especially supermarkets and hypermarkets around major developed and developing economies across the world.
The demand for electronic shelf labels is likely to increase based on the relationship between various macroeconomic factors, which include increasing urbanization, GDP per capita and economic growth, and overall sales of goods.
Historical Outlook vs. Future Outlook
- Europe’s electronic shelf label market is expected to have a market value of about $372 Million by the end of 2022 because of the high adoption of technology.
- North American market is forecasted to have a revenue share of 22% by the end of 2022 and a valuation of $1.2 Billion in 2032 with a growth rate of 18.8%.
- In the product category, LCD (Liquid Crystal Display) is presumed to have a value of $1.2 Billion by 2032 with a 17.3% growth rate.
- In the product category, the e-ink segment is expected to grow at a CAGR of 18.6% between 2022 and 2032.
- Based on application, departmental stores are projected to have a growth rate of 17.5% with a 29% market share by the end of 2032.
- Based on application, the convenience store segment holds a market share of 18% with a forecasted value of $839 Million by the end of 2022.
Growth Drivers
- Factors such as the adoption of new channels for product supply, rising wages, and higher investments in the retail sector influence the introduction of automation.
- With the everyday increase of competition happening in the retail sector, variation of price is a necessity to complement product sales. There has been a surge in the demand for convenient, less complicated, and cost-effective solutions like electronic shelf labels in retail stores and this has increased its need.
- Given that businesses are investing highly in technologies to enhance customers’ shopping experience, digitalization is here to stay. Retailers are offering customers more options to explore during the purchase process and an easy transition between online and offline buying platforms is more crucial.
- Promotional offers and adverts are easily communicated to customers through digital shelf labels and other display solutions like LCD, which goes a long way in influencing their purchase decisions. Concerning the great customer service they provide, electronic shelf labels have become important sales funnels for retailers across the globe.
- The deployment of electronic labels allows for price updates on the shelves instantaneously. It can also be used for real-time promotion, involving comparison shopping, promotional costs, and promotional information. These features help retailers to gain an edge in the competitive market, boost sales, and reduce the store’s operational costs.
- Stores managing many stock-keeping units (SKUs) will benefit from the usage of digital shelf labels as they offer an edge over paper labeling and support frequent changes in prices or promotions.
- The frequent change of many paper labels is a costly and lengthy process. The manual process consumes more time and money with a higher probability of errors.
Key Limitations
- Electronic shelf label market growth is limited by high installation and operation costs. Retailers in developing regions are yet to fully embrace the technology as the operational cost of managing modern retail is quite higher in developing countries like Indonesia, India, Brazil, and African nations because they have limited resources.
- The electronic shelf label market growth is hindered because of high infrastructure costs. The technology is in the higher price range for developing countries, most especially for India and African retailers because they don’t have additional shelves that are electrified for ESL solutions. There are unlimited electronics shelf labels suppliers in these regions as compared to the US, China, and Europe.
- While wireless and display technologies have improved from technical and cost styles, the problems are yet to be solved fully. If the wireless coverage is not big enough, dead spots in the store may remain, causing some tags to miss updates and require physical intervention from the staff.
- Tags located in harsh environmental conditions like freezers will be more costly or fail more often, hence needing staff attention.
- Even though tags can be much larger, it is possible that digital solutions won’t be used in place of all signage. This means that staff will be managing two platforms, hence an increase in labor cost.
- Extra tags must be kept on-site to replace failed tags.
- If the wireless system or software programs fail to update the tags, they will remain frozen, not allowing customers to have access to recent prices.
Fixing all these limitations requires heavy investment in advanced wireless technology, which is not feasible for many retailers in developing regions.
Opportunities
- Currently, electronic shelf label manufacturers are making efforts to devise more solutions that can help in increasing profitability, productivity, effective management, controlled selling prices, and better customer service.
- In recent years, developing countries have stood out as promising retail automation markets. Retail stores are gradually adopting automation solutions like ESL price tags that can cater to the increasing number of middle-class shoppers.
- The growth potential of retail automation stores in developing economies is a major opportunity for the electronic shelf label market. Moreover, automation products are already in high use in developed countries. Having seen the benefits involved, some developing countries are beginning to key into the system. These emerging markets are expected to increase the electronic shelf label market size in the coming years.
Challenges
- Retail business is becoming more competitive every day with various brands trying their best to cater to the increasing demands of customers. This intense competition has led to differentiated products being offered to customers, and most of the time, the differentiation factor is the price. The fierce competition has resulted in price wars between businesses, which has caused degradation in retail outlets’ margins.
- Offline and online competition has increased substantially as consumers are offered a better buying experience. Competitive pricing, high discounting, and 24/7 customer service by online retailers have added to the existing challenge of reducing margins.
- The reducing margins faced by physical stores retailers have also blocked the way toward automation as infrastructures, components, and other equipment needed require an upfront commitment, which usually takes time to produce significant returns.
Segmentation Analysis of Electronic Shelf Labels Market
The activities and future valuation of the electronic shelf label market can best be analyzed in four different segments, which are the product type, technology, end-use industry, and region. They are discussed below.
Product Type Analysis
By type of product, the market is divided into e-paper and LCD. The e-paper product category currently holds and is projected to have more market share than LCD. The ability of e-paper to display content in graphical forms together with the promise of low power consumption and enhanced energy efficiency guarantees immense growth.
Even some major market players prefer using e-paper for ESL solutions. A good example is a collaboration between Innolux Corporation and E-ink Holdings Inc. in May 2020. Both firms partnered to develop large-sized Advanced Color e-Paper (ACeP) panels. The mission of the companies is to grow the e-paper business and expand its ecosystem. These e-papers are produced to be majorly used for in-vehicle advertisement signage, retailer signage, and digital conference room signs, amongst others.
E-paper is further divided into two categories – segmented e-paper and graphics e-paper. The graphics e-paper is forecasted to witness the highest growth as it is energy efficient and can project graphical objects like logos and callouts, as well as facilitate real-time product positioning. It ensures crystal-clear readability even in dim lighting environments.
LCD products are more costly than e-papers, hence the slow adoption. For example, while a Kindle paper costs about $119, the mini iPad with a retina screen is priced at about $400. The LCD product segment is projected to have moderate market growth in the coming years.
Technology Analysis
This segment is divided into two parts – vendor-facing analysis and consumer-facing analysis.
Based on vendor-facing technology, the electronic shelf label market majorly adopts the use of infrared and radio frequency technologies. The radio frequency analysis projects a high market share, while the infrared technology category is likely to have a remarkable growth rate in the coming years.
Major market players provide ESL solutions based on radio and infrared frequencies. For example, Zhsunyco®, a highly-rated professional electronic shelf label manufacturer offers radio frequency-based electronic shelf label solutions that operate in 2.4GHz and 433MHz RF systems. Also, Pricer AB provides infrared technology-based in-store digital solutions to boost store management and customer experience. Similarly, SoluM provides radio frequency-based digital ESL solutions that function in 2.4GHz and 900MHz RF systems.
Based on consumer-facing technology, the electronic shelf label market majorly adopts the application of Bluetooth low energy (BLE) and near-field communication (NFC). Following projections, advancement in these two technologies is likely to drive the market to an extremely higher growth trajectory.
NFC electronic shelf labels are projected to become the most demanded technology with retailers and customers. This technology enables advanced stock management by supporting dynamic product pricing and promotional updates, as well as simplifying customers’ interaction with NFC-enabled mobile devices.
On account of the increased popularity of NFC-based payment procedures, the technology is forecasted to have immense growth. More than ever, retailers in the market are focusing on introducing self-checkout systems that allow customers to pay instantly while shopping by scanning the electronic shelf labels with their mobile phones.
With Electronic labels, customers will effortlessly get product information and pay conveniently with NFC cards or smartphones. Scanning the label leads customers’ smartphones to the product webpage where they can get more information through built-in NFC. Payment can also be made immediately, canceling the need to stand in long queues at cash counters.
On the other hand, BLE ESL is forecasted to remain popular among retailers. This technology allows market players to apply BLE in the Internet of Things (IoT) purposes like asset tracking and beacons. Also, its ability to function with mesh networks will probably contribute to its usage in the near future. However, BLE technology is projected to be mostly used by large-sized retailers because of its ability to function in a large space.
End-use Industry Analysis
Based on the end-use industry, electronic shelf label market size can be influenced by the application of electronic labels in some major departments, including warehouses, hypermarkets/supermarkets, non-food retail stores, specialty stores,s and other stores.
Due to the fact that manufacturing industries have to make products available at all times, there is a need for a warehouse to store the products until they are sold. With electronic shelf labels, production will continue at full course without the challenge of mixing the prices or heavy workload for staff. Each product type will be segmented and their price tags will be attached, helping staff to better manage the manufacturing process.
Hypermarkets/supermarkets have large areas with many floors, as well as a warehouse where products are stocked for easy sorting to ensure effective inventory management. Hence, electronic price tags in supermarkets are greatly required to optimize labor costs and improve customers’ experience.
Presently, non-food retail stores like fashion, pharmacies, and 3C (computers, communications, and consumer electronics) stores are beginning to adopt the application of ESL price tags into their management systems. Following the trends, these stores are expected to be major consumers of ESL price tags in the coming years.
Specialty stores i.e., retail stores that are focused on specific items like furniture, sporting activewear, bookstores, and many others forecast a significant adoption of electronic shelf labels in the near future. With ESL tags, there will be a better organization of products and superior management as customers will be able to note the differences between lookalike products, hence helping them to make the best buying decision.
Regional Insights
By geographical basis, electronic shelf label market size growth is analyzed across five major regions, including Europe, Latin America, Middle East & Africa, North America, and Asia Pacific.
Europe is projected to have the most ELS market share. Governmental regulations are part of the factors fueling the market growth across the region. A perfect example is the French Consumer Code adopted by the French Parliament stating that product prices should be clear and transparent to customers, incorporating all the necessary fees like delivery and postal charges. The failure of any business to provide accurate information for each product will attract high penalties, hence why European retail stores are using digital price tags to display product information.
In the next decade, Latin America is expected to have the highest growth rate. Argentina, Brazil, and Mexico are anticipated to hold a prominent position in the region. Latin America is a growing market for e-commerce, hence possessing a major share of physical eCommerce.
The increasing use of smartphones and growing internet penetration in the Middle East and Africa are determining factors that promise to support the growth of the electronic shelf-label market. In addition to this is the steady transition towards digitization that’s as a result of the introduction of augmented reality (AR) and image recognition technology. pushed Middle East and African retailers to explore and adopt new sales tools. Based on these factors, the market share in the region is expected to increase.
With the United States retail industry thriving towards the adoption of more digitized sales tools, like “Buy Online & Pickup In-Store (BOIPS)”, North America is projected to hold a notable share in the global market. Retail titans like Walmart have steered the U.S., leading to the increase of activities in the region.
In the Asia Pacific region, a lot of growth is also expected following the increasing investments in the retail industry, as well as the globalization and development of the organized retail sector.
COVID-19 Impact on Electronic Shelf Label Market
Just like other industries, the electronic shelf label market took a lot of hits from the COVID-19 outbreak because the industry had just started buzzing with many retailers beginning to accept its essence. The pandemic resulted in a severe economic attack that affected many nations, trade routes, and the global supply chain. Due to lockdowns and worldwide store closures, the e-commerce industry, including the electronic shelf label market collapsed.
The lockdown had a negative influence on both manufacturers and customers. The electronic shelf label market size that was growing fast had to slow down. Due to the scarcity of supply and high demand caused by panic buying of customers, governmental restrictions, and labor shortages, the supply chain was also heavily affected.
Retail stores were barred from selling necessities despite the fact that many retailers all over the world were complaining of a fall in revenue as customers were also complaining about not having access to get their needs. The economies of major digital shelf label exporters, including the U.S, China, Japan, France, and Canada also took some hits.
After the lockdown was lifted although, with some rules like social distancing, electronic shelf labels became very crucial in obeying the rules. Retailers were able to display product information digitally without shoppers contacting workers. And unlike the paper label system, ESL tags are legible and easy to clean, hence preventing the spread of the virus.
Rising Demand for E-Papers to Propel Electronic Shelf Label Market Growth
E-paper, also referred to as e-ink offers exceptional benefits and its demand has been increasing significantly. E-paper is popularly used in low-frequency switching displays like electronic shelf labels as it offers a low-power paper-like display and an ultra-long battery life.
High-quality e-paper display provided by a professional e-ink display manufacturer possesses image memory and can maintain its display without power. The only time when power is essential is when you want to make a change to the information displayed. E-papers offer multiple advantages like high reflectivity & contrast, legibility, and a wider viewing angle. Also, it’s a cheaper and more effective alternative to the traditional paper label system.
The initiative introduced by professional e-ink manufacturers to offer smart shelf labels is accelerating the electronic shelf label market development.
Conclusion
Just as other industries are incorporating technologies in their activities, the electronic shelf label sector is highly rated for the same. Retail stores have embarked on a full mission to automate their store system with digital shelf tags that will ease management stress and offer customers a better shopping experience.
Over the years, this movement has seen some opportunities and challenges, however, the forecast for the electronic shelf label market size in the coming years is promising. Overall, the application of electronic shelf labels holds so many benefits and is highly profitable. For further assistance and additional inquiries, you can contact us and we will be glad to help.
