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Sears’ $1.1 Million Wrong-Price Penalty: No Simple Tech Fix

July 21st, 2010

Dickey added that some difficult environments–such as freezers–will make breakage even more likely. Also, staff management of the system–and dealing with all of the exceptions–may create a personnel burden not that much lighter than the manual one ESL is supposed to replace. “It is likely that not all signage will be replaced by the digital solution, meaning staff will have to manage two platforms,” he wrote.

Technically, the day that did Sears in was Jan. 21, 2010, at about 11:30 AM, when California investigators bought a series of items from a Sears store. These purchases included a $7.49 Kraftsman folding utility knife—which rung up at a POS as $14.99—and a $29.97 six-pack of a Covington athletic t-shirt that the POS listed at $39.96, said Stuart Lytton, a Los Angeles deputy district attorney.

We say “technically” because other prosecutors involved in the case stressed that Sears would not have been charged for the incident if state investigators hadn’t documented a much larger number of over-pricing incidents at stores throughout California.

“The computer and the people didn’t interact that well,” said Lytton, referring to Sears’ employees and its POS system.

Some retail IT execs who had hoped, a few years ago, that ESL would solve the inconsistent pricing issue have been disappointed, said Robert Nickels, a deputy district attorney for California’s Marin County. “They weren’t the great panacea that [retailers] thought they were. There were a series of problem,” said Nickels, adding that labels often didn’t contain enough information and that they “didn’t necessarily say what product it referred to.”

Greg Buzek, who has tracked ESL and related technologies for years as president of IHL, said there are a host of reasons ESL hasn’t taken off.

“The single largest pricing issue many retailers have is getting the promotional prices that are in the flyers into the stores. Often, the stores don’t have those prices in time reflected on their price labels,” Buzek said. “When it comes to electronic shelf labels, the disparity in prices could be due to disparate databases if the labels are not working off the same database as the POS system. If they are working off the same database, any disparity is very likely due to human error in either entering the data or synchronizing the host pricing table to the store.”

Whether the pricing systems are automated or manual, there are so many pricing hiccups with these systems that the only way to maintain pricing consistency is through relentless store management. No one likes checking and rechecking prices, but Sears now has 1.1 million reasons to take that chore much more seriously.


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2 Comments | Read Sears’ $1.1 Million Wrong-Price Penalty: No Simple Tech Fix

  1. MikeL Says:

    This is a simple example of an attempt to use technology to correct human behavior rather than using humans to correct human behavior. If staff and department managers aren’t held accountable for improper shelf/item pricing IT can’t solve that. Store and district managers need to start firing people until they find ones who will work. And if that doesn’t happen the CEO needs to replace store/district managers. IT is great but it can’t fix stupid.

  2. Bill Bittner Says:

    I have implemented ESL’s and have designed a system for automated verification of paper shelf tags. The key take away here is that this is still a problem after so many years of trying to address it. I think the reason it remains a challenge is because people don’t take a systematic approach to the problem. By looking at the way people execute price changes to ensure there is a feedback mechanism and continuous monitoring instead of assuming labels and prices are updated, retailers can go a long way to eliminating fines and disappointed customers.

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