Nebraska Furniture Mart brings dynamic pricing to stores

October 28, 2015 05:00 PM

Online retailers like Inc. change prices on many items frequently to undercut rivals, but that’s harder to do in bricks-and-mortar stores where items carry physical price tags. Furniture, electronics and appliance retailer Nebraska Furniture Mart has solved that problem by putting electronic tags on store items in price-sensitive categories and updating prices daily. It then built on the technology to make it easier for consumers to find items in its three massive stores.

The retailer each night scans 35,000 SKUs in the electronics and appliance categories on the e-commerce sites of 18 retail competitors—including Amazon, Best Buy, Home Depot and Lowe’s—and, before its stores open in the morning, updates the prices on the electronic labels if necessary to meet its guarantee of offering the lowest price.

“We’re taking the work out of our customers having to go to competitors to get pricing,” says Jeff Douglas, general manager of e-commerce at Nebraska Furniture Mart, No. 368 in the Internet Retailer 2015 Top 500. “We’ve already done that for them and lowered our prices for them.”

The retailer’s e-commerce site,, touts the dynamic pricing feature. “Did you shop around for the lowest price? We did,” says a badge on several pages of the site. The site features a low-price guarantee that says Nebraska Furniture Mart will refund 110% of the price if a shopper finds an identical item at a lower price at a local retailer or at any of 18 major retailers’ e-commerce sites.

For a retailer that promises low prices, electronic shelf labels are “a great way to express their brand promise,” says analyst Adam Silverman, who covers digital store technologies for Forrester Research Inc. “Having the lowest price in aisle will ensure that they keep the transaction in the store.”

He says electronic shelf labels haven’t taken off largely due to the expense. Each digital label costs $5-$10, based on published reports and current online prices. A 2014 report by ABI Research projects global sales of electronic shelf labels will grow sixfold to almost $2 billion and that retailers that deploy the technology typically make back the initial investment in 18 months. Among U.S. retailers that have deployed electronic shelf labels in some stores are The Home Depot Inc., No. 10 in the Top 500, and Kohl’s Corp., No. 22.

Nebraska Furniture Mart has deployed 40,000 electronic tags from Swedish supplier Pricer AB in its three stores. In some cases a single tag covers the price for several variations of an item, such as different colors, styles or configurations. The retailer also has embedded about 250 infrared transceivers—devices that receive and send signals—in the ceilings of each of its stores, spaced 50 feet apart, and it uses them to transmit price changes to the digital price tags. The retailer changes prices just once a day, before the stores open, so that prices don’t change while a customer is examining an item, Douglas says.

The retailer tested the system with electronics products in 2014 and rolled it out to all appliances and electronics products in January 2015.

Douglas would not say what the system costs but says it helps the retailer keep up with rivals’ prices. “It’s a lot of work changing out tags every day when you’re trying to stay competitive,” he says. “This is a large investment up front, but it allows us to stay fluid with how things change in the market every day.”

The retailer also built on the digital price-tag system to help shoppers find their way around the three large Nebraska Furniture Mart stores. The stores in Omaha, Neb., and Kansas City, Kan., are each about 420,000 square feet, and a new store in The Colony, Texas, a suburb of Dallas, is 560,000 square feet. By comparison the typical large-format Wal-Mart supercenter in the United States is 182,000 square feet.

Because the infrared transmitters and digital tags identify the location of each product, Nebraska Furniture Mart only needed a way to locate a shopper in a store to show her the way to the product she wants. To do that, the retailer added beacons—small wireless transmitters that send signals to mobile phones—to its stores that identify where a shopper with the retailer’s mobile app is in a store, based on the location of her phone. The retailer introduced in April its Wayfinder app that lets a consumer in a store search for a product and get a map showing where it is as well as turn-by-turn directions on how to get there.

The retailer promotes the app with signs in its stores and on flat-screen displays in the new Texas location. The Texas store has Wi-Fi, making it easier for shoppers to use their mobile phones in stores, and Nebraska Furniture Mart is adding that wireless technology to its other two stores, Douglas says.

Forrester’s Silverman is less enthusiastic about the app than the electronic price tags. He says fewer than 5% of consumers have used mobile apps to find their way around stores, according to Forrester data. Navigation apps in stores are not always accurate, he says, “plus it’s much easier to just ask an associate where a product is.”




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