Evan Schuman's StorefrontBacktalk

Sears and its Kmart subsidiary on Monday (July 19) agreed to write a $1.1 million check to various California law enforcement agencies to settle charges that the company repeatedly charged consumers much higher prices than advertised. Officials said the overcharges appeared to be human error–as opposed to a technology glitch. But the overcharges happened so often and in so many locations that they seemed to be systematic.

The frustration for other retailers trying to avoid Sears’ fate is that technology can only go so far and that without extraordinary vigilance, pricing errors are almost unavoidable. A relatively tiny number of chains in the U.S. have toyed with electronic shelf label (ESL) packages—including TJX, Wal-Mart, Albertson’s, BJ’s Wholesale, Costco, Kohl’s, Pathmark, A&P, Whole Foods, Waldbaum and Kmart itself—but few have been deployed in a meaningful way.

California authorities point out that, even had they been deployed, today’s ESL offerings likely wouldn’t have spared Sears the fine. First, there are too many low-tech issues. For example, if store management places a big sign in an aisle proclaiming that everything in a particular section is an extra 40 percent off today only, the shelf labels would be superseded and made irrelevant. Also, many of the items at Sears were clothing items that had their own pricetags, as opposed to goods that are solely governed by a shelf label.

Although those are all low-tech issues, ESLs have plenty of high-tech issues, too. Among such issues is wireless interference (no wireless signal, no updated pricing). But if those wireless problems are sufficiently intermittent, store management may never even know that some of the labels are not being updated.

A technology consultant working for NCR Canada–one of the larger vendors trying to sell ESLs–recently posted a wonderful blog item on some of the technology’s very real hurdles, especially cost.

“There is still a significant startup cost with thousands of tags required at the outset. There will also be an effort to get all of the tags programmed with the correct UPCs, and the installation costs, which may also require changes to shelving and tag mounts in the stores,” wrote NCR’s Tim Dickey. “There is also the cost and effort of validating that all tags are working with the wireless network and interfacing with the program to validate prices correctly required at every store. From an ongoing perspective, the costs appear very low at first glance, but it is important to consider that there will be replacement costs for tags that are stolen or damaged, or just quit working. If there is a failure of the wireless system, or the software program to update the tags, the tags will be frozen at one price, and not updatable.”