Sears’ $1.1 Million Wrong-Price Penalty: No Simple Tech Fix
Written by Evan SchumanJuly 21st, 2010
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.
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2 Comments | Read Sears’ $1.1 Million Wrong-Price Penalty: No Simple Tech Fix
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July 21st, 2010 at 11:31 pm
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.
July 22nd, 2010 at 12:44 pm
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.