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Announcements | June 25, 2020 | 4 min read

Retail: Digital is better – but the devil is in the details

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A critical analysis of digital pricing systems exposes a clear convergence of interests of retailers and customers towards comprehensive service platforms

Ettenheim, June 2020 – Toilet paper is always available, Germans preferably pay cash, amendments of laws take years.

Many certainties suddenly dissolved in Covid-19 times. A hotly debated topic are the effects of the short-term value-added tax rate cut on retail in Germany. A close look into the matter is well worth the effort. Michael Gerling, GM of the EHI-Institute, made an outstanding contribution with his critical analysis of June 18. In this analysis, Mr. Gerling estimates the in-store retail demand for new price labels to be around 200 million units and the costs for this adaptation to be between Euro 20 and up to 50 million.

Internal surveys conducted by SES-imagotag showed that the correct change of a paper price label at the shelf takes about one minute. At an average domestic super market with a product range of around 10,500 items, this procedure takes 175 hours. This means: two full-time worker need more than two weeks to complete the job!

Mr. Gerling views companies, that already invested in digital price labels, to have a clear advantage in this situation. The benefit is obvious: It only takes a click and the VAT is automatically changed and displayed on the price label. Integration with the point of sale system is also automatic. The retailer profits twofold: he saves to a significant extent material costs and also working time. By the way, the Federation of German Consumer organisations [Bundesverbraucherzentrale] recently pointed to the legally problematic nature of a general VAT deduction at the point of sale.

But critical analysis must dig even deeper. Retailers counting on a comprehensive and interconnected digitization of their businesses have even more advantages. Equipped with full-graphic displays and a retail platform digital price labels unfold their full potential.

Real price labels are full-fledged modern information media: Whether hygiene rules, admission restrictions, delivery dates, offers, discounts – all of these contents can be individually presented and very easily adapted.

Acceptance for contactless payment increased significantly. Real digital price labels enable immediate and secure payment via Smartphone.

These two properties offer advantages for retailers and customers. They are strong confidence-building measures as regards security, transparency and service. These factors are – precisely in times of growing uncertainties – of invaluable value for the retail industry.

Since the launch of the new VUSION Product Line in 2018, SES-imagotag is massively expanding the development of the digitally interconnected platform technology for the retail industry. For this reason, the market leader for digital pricing technology invests annually around 5 percent of its sales revenues in R&D.

Many retailers ignored for a long time the disruptive power of digitization. Now we have a situation, where the Corona Pandemic abruptly demonstrated the local and global effects of a disruption. Retailers having invested in digital technology and processes profit now from their investments when the value-added tax rate is cut in Germany.

SES-imagotag aims to make physical retail stores digital and fit for the future – jointly succeed in dealing with the disruption as partners.

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