Best Buy is in the midst of a major transformation, rolling-out digital price tags to 150 locations across America. This many not seem like a big deal given that Best Buy and other retailers have been slowly testing, adopting, and un-adopting digital tags for years. However, this latest digital tag rollout seems different.

Best Buy’s 150 new locations join 60 storefronts that went digital at the end of 2017, meaning that a substantial 20% of all Best Buy locations will soon have digital price tags. Perhaps even more significant, Best Buy wrote a hefty $30 million check to fund this latest rollout, a clear sign that the CE giant has graduated from the pilot phase of its digital price tag journey and is ready to get serious.

To most Best Buy watchers, the chain’s digital price tag transition is a cost and efficiency play. That’s a fair assessment, but sales and customer experience benefits should come quick, and there will be even greater strategic implications as digital tags expand across more locations (very likely) and if/when Best Buy starts to take advantage of the real-time benefits of digital tags.

Best Buy Digital Price Tag

Cutting Costs

Sure, these digital price tags are expensive, but so is labor. We’ve heard that even the smallest Best Buy locations devote up to 40 labor hours each week to price tag management, equaling almost 2,000 labor hours a year (and that’s the small stores!). Multiply that across these 210 initial locations, which certainly include mid- and large-size stores, and Best Buy should be able to eliminate $10 million or more in merchandising labor during the first year (not including price tag printing/shipping savings and savings from reduced pricing override losses).

Improving the Buying Experience

Cost reductions may have helped Best Buy justify making this leap, but perhaps the most valuable short/mid-term payoff will come from how these digital tags help improve the buying (and selling) experience.

Real-Time in-Stock Status – If there is one thing that slows down a sale (or kills it), it’s going through the buying/selling process to find out that the item the customer wanted is out of stock. The new digital tags’ in-stock status signal fixes that problem, allowing the sales rep to identify which products are available and then steer the customer to the models that they can buy immediately.  After all, if the customer wanted to wait a few days to use the device they’re shopping for, they would have bought online.

Open Box Gets Legit – Poor open box products… For years they’ve sat away from their “unopened” counterparts, sporting handwritten labels that detail their marked-down price and explain what’s wrong with them. Meanwhile customers (and sometimes sales reps) have no way of knowing that a lower-price version of the product they are considering may be sitting nearby. Best Buy’s new digital price tags fix this problem, listing the price and availability of both new and open-box versions of the same product on the same tag (see above image), and making sure doubts about the quality of an open box item isn’t exacerbated by its handwritten tag and separate location.

Cross-Department Price Consistency – Digital price tags essentially solve the challenges that Best Buy has experienced trying to consistently execute price changes for products shelved in different parts of the store, which has become particularly troublesome with its increased adoption of the “store-within-a-store” concept. You don’t have to take my word for it… Here is a Slack quote from our Smartphone and Voice Assistant Speaker analyst, Scott Peterson: “I cannot tell you how many times an identical iPhone is price A in the Apple section, price B in the ATT section, and price C in the general smartphones section. The week I saw these digital tags… all pricing was aligned. I teared up a bit.”  There may be a happy few tears shed among Best Buy’s smartphone sales team, too.

Clubstore connected

Future Opportunities

Once all price tags becomes digital, Best Buy can get really creative and really aggressive. Without having to deal with the delays and costs of price tag changes, Best Buy has the opportunity to match the pricing flexibility that ecommerce has traditionally had a monopoly on and create a next generation shopping experience for its customers.  

Think about it, Best Buy could…

  • Seamlessly extend its online Deal of the Day promos to retail shelves (or offer in-store only Deals of the Day).  
  • Create the excitement and urgency of hourly Prime Day-style deals without running its merch team ragged swapping out price tags every sixty minutes.  
  • Take a page out of Amazon’s playbook by adopting real-time competitive price adjustments to combat showrooming. 
  • Allow Best Buy to better integrate its online and in-store pricing and promo strategy.
  • Who knows, your neighborhood Best Buy could adopt a daily “happy hour” deals.

The opportunities that come with real-time and labor-free pricing management will surely go far beyond these examples, which merely help it catch up with eCommerce. Pretty exciting stuff.

But First

Best Buy still has to execute this rollout and get its digital tags to at least match the performance and reliability of paper tags. This transition will almost certainly come with its share of technological and procedural challenges, but progress and challenges are a package deal and I feel this is one undertaking that will be well worth it.

For more than 15 years, gap intelligence has served manufacturers and sellers by providing world-class services monitoring, reporting, and analyzing the 4Ps: prices, promotions, placements, and products. Email us at or call us at 619-574-1100 to learn more.