Business operators often keep it close to the vest when they plan a change that will benefit them more than their customers. In many cases, for example, they frame their decision as being positive for customers.
That often happens when a company automates tasks that workers used to perform.
“Automation will strip away the dull and the dangerous, paving the way for more engaging work and learning,” McKinsey shared in a study.
Retailers and restaurant chains often claim that automation frees up workers for customer service tasks. That’s exactly what Walmart has been saying about its new digital shelf labels (DSLs).
“Between new inventory, Rollbacks and markdowns, pricing updates stack up fast and can take hours, if not days, to complete. Before DSLs, that meant walking up and down aisles, swapping out paper tags by hand. Now, associates manage planned price changes through a centralized Walmart system,” Walmart shared in a press release.
The company has already added DSLs to more than 2,300 locations and plans to offer it chain-wide within the next year.
“For our associates, that expansion can’t come soon enough,” Walmart shared in a press release.
Walmart may have secondary motives
“News of Walmart’s rollout nonetheless stirred up concerns that DSLs will lead to dynamic or surge pricing, where retailers or other businesses quickly change the cost of products or services based on fluctuations in demand due to weather or traffic — or even using personal data like location, browsing history, and purchase patterns to set individualized prices,” according to RetailWire.
Walmart has denied that it plans to use the technology that way.
“Prices are the same for all customers in any given store and are consistent regardless of demand, time of day, or who is shopping,” according to Walmart’s statement.
Walmart may simply be making its first move
Carol Spieckerman, a retail thought leader and owner of Spieckerman Retail, pointed out that Walmart is telling the truth, at least in the moment.
“Here’s the reality: there are no technical safeguards preventing surge pricing or other forms of price manipulation. The capability exists. But two things can be true at once. The multifaceted efficiency arguments are also easy to make and genuinely valid,” she posted on RetailWire.
The American consumer, she noted, has already accepted dynamic pricing in many areas.
“Consumers are already shopping and buying under dynamic pricing models. Every time they shop online, book a flight, order an Uber, or even buy from Amazon, they’re seeing algorithmically determined prices that shift based on demand, time of day, browsing history, and countless other variables. Implementing these same capabilities in the physical store environment hits different (for now),” she added.
Frank Margolis, a global retail leader, takes a more positive view of Walmart’s efforts.
“While Walmart will not see the same labor savings from ESLs as other retailers, due to their everyday low prices (which means fewer price changes), the labor savings will more than justify the expense. Associates can spend this time stocking shelves, assisting customers, or cleaning — thus improving sales and the customer experience,” he shared.
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TheStreet retail advisor and RTMNexus CEO Domink Miserandino believes Walmart, but also expects changes down the road.
“Walmart says its digital price tags aren’t about dynamic pricing, and that’s probably true for now. But once you install technology that can change every price in the store in seconds, you’ve also created the infrastructure that could support dynamic pricing down the road. And that seems quite a powerful tool that is tempting to use and misuse in the future,” he shared via email.
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Will DSLs mean fewer Walmart jobs?
“Manually changing shelf edge labels is time-consuming and costly. Electronic shelf edge labels are much more efficient and are now at a stage of development where the cost is reasonable. Walmart’s primary focus is on savings,” GlobalData Managing Director Neil Saunders shared on RetailWire.
“Could it implement dynamic pricing? Sure. Will it? Unlikely, especially to an extreme degree. Walmart’s whole consumer promise is built on low and honest prices. If they undermine that, they lose a huge part of their appeal,” he added.
But, while dynamic pricing may not be the immediate goal, cutting jobs could be. Walmart has consistently grown its revenue, but not its workforce.
Walmart aims to grow sales by 4% annually without increasing its headcount, marking a contrast in the hiring dynamics of U.S. retail trade, which employed one in 10 American workers, the Financial Times reported.
The chain has actually slightly reduced its overall workforce during that time period, despite growing its sales.
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