I got a behind-the-scenes look at Walmart's new digital price tags that are sparking controversy

Board games including Jenga and Scrabble sit on a shelf with digital price tags and a paper tag below. — Walmart is switching from traditional paper price tags, as shown on the right, to electronic shelf labels, as shown on the left. Dominick Reuter/Business Insider

Walmart is rolling out digital price tags in its US stores, and public reaction has been mixed.
I visited two locations to see how the tech works for employees and customers.
The change for shoppers is small right now, but the tech could lead to some interesting improvements.

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A big change is afoot at Walmart, and some shoppers are starting to notice.

It all comes down to one of the smallest (but most important) features of any store: price tags.

The retail giant's adoption of so-called digital shelf labels in place of traditional paper ones is causing a bit of confusion and concern about whether shoppers will get a fair deal.

Several lawmakers have filed bills to prevent the tech from being used for surveillance pricing or surge charging. A proposal in New York State would prohibit electronic shelf labels in stores altogether.

Walmart said in March that about half of its stores have the technology, and the remaining ones are expected to get it within the next year.

To learn more about these shelf labels and see how they behave in the wild, I visited two Wisconsin supercenters to talk to employees who are navigating the change.

I visited the Walmart in Portage, Wisconsin, where staff were setting up the new shelf labels.

Dominick Reuter/Business Insider

Most of the store still had paper labels, and the team had been working around the clock for two days before my visit to install the digital labels.

Walmart employee Elizabeth Nigh showed me the typical price change process with the paper tags.

A worker organizes rolls of labels and electronic shelf tag components in a backroom storage area.

As many as a dozen employees can be busy during a shift, working through the changes.

On Tuesday morning, the store had nearly 1,200 prices to change across departments.

Walmart prices are set by the corporate headquarters in Bentonville, Arkansas, and managed by store workers with an app on their devices.

The paper price tags are made using small portable printers.

Hands load a roll of labels into a handheld printer beside rolls marked clearance and rollback.

Other hardware is sometimes needed, such as colorful frames and pop-ups, to help a special price stand out on the shelf.

Each four-foot section of the store has a code to scan that calls up labels to print for that location.

A store worker reaches up with a smartphone to scan a shelf code in a hardware aisle filled with tools.

Walmart assigns every item a location in the store, typically including the aisle, segment, shelf, and position.

Nigh then fishes the old label out of its plastic sleeve and slots the new one in.

An employee swaps out a paper price tag.

If there is a discrepancy between the shelf price and the register price, consumer protection laws generally require retailers to honor the lower one.

Customers don't typically complain if they're rung up for less than they expected to pay, but it can be a rude surprise for a shopper (and lost money for a retailer) if a price increase isn't yet reflected on the shelf.

The printer handles up to 10 labels at once, so larger runs are done in batches.

A close-up shows lip products on a shelf with rollback price tags and a hand adjusting the display.

Each shade of lip gloss had its own product code, so each one needed a label.

That can add up fast in categories with a lot of variations, like health and beauty.

Rows of colorful nail polish bottles line store shelves with rollback signs and paper price tags.

The typical Walmart supercenter carries around 120,000 products, and prices in some departments, like grocery, can rise and fall in a matter of days due to market conditions.

I then spoke with Derek Gordon, who was installing digital shelf labels in the toys and games section.

A store employee points toward board games on a shelf, including Monopoly and Scrabble.

He said it takes him about six minutes to adapt a standard shelf section for electronic labels. It's a few minutes of extra work up front, but he said it saves time down the line compared to paper labels.

In most cases, a rail clips onto the shelf face in a few clicks.

A worker adjusts electronic shelf labels beneath board games like Disney puzzles and Rummikub.

An integrated battery in the rail can power the electronic labels for up to eight years. A spokesperson told me the design was more economical than having each label contain its own battery.

Gordon scans the tag's barcode with an app to make sure it's on the correct product.

A close-up shows a person scanning a shelf label with a smartphone in front of Uno card game boxes.

Like with the paper price tags, each four-foot section has a particular plan that store employees must follow and match.

The system Gordon set up had no sensors or cameras that could capture information about who was shopping.

A worker kneels in a toy aisle using a smartphone to scan or manage items on a shelf.

He said that meant the labels couldn't gather or transmit any personal information about shoppers.

A proposed bill in New York state would ban retailers from using shoppers' personal information to adjust prices selectively.

Once scanned, Gordon taps a button, and the tags flicker on to reveal the prices in the system.

A store shelf displays various board games and card games with electronic price tags along the edge.

Walmart told me prices are set by the corporate office in Bentonville, and changes are pushed out to stores overnight.

Some social media videos have captured the prices changing on the electronic labels in the early hours of the morning, before most stores are open for business.

Gordon had a box of the old tags and a bin full of the new ones.

A cardboard box contains scattered electronic shelf labels alongside a bin filled with paper tags.

Employees at another store I visited said the digital tags are more durable than the paper ones against shopping carts and other hazards, but they still sometimes get banged up. If a tag breaks or goes offline, it alerts the staff via the app.

Store manager Zach Zeman told me he has the authority to lower prices to stimulate sales, but he can't raise them above the range set by HQ.

A store employee walks through an electronics section with tables of devices and overhead department signs.

"There's no way for us to be able to adjust that price up higher," he said, adding that there's an error alert if someone accidentally enters a number above the authorized price. The store manager at another location I visited said the same thing.

Store prices generally match what is displayed on Walmart.com, Zeman said.

The new tags are also less likely to slide side to side on the rails, which means that displays are more consistent with the planned layout.

A shopper with a cart looks at a large wall of spices arranged in rows inside a Walmart.

The workers called this concept "modular integrity" and said it helps make restocking easier when there's enough space for each item.

It's here, faced with dozens of similar items on a shelf, that digital labels could make a difference for shoppers.

A hand holds a smartphone displaying item information for thyme in front of a spice aisle with digital price tags.

Walmart plans to roll out a feature for shoppers in its app that would activate an LED light on the shelf tag to help customers find what they're looking for.

The feature is already available for employees and Spark delivery drivers, but the company hasn't said when it'll be available for customers.

These little blinking lights are shortening pick times and increasing order accuracy, an employee told me.

Jars of spices including sage and thyme are displayed with electronic shelf labels showing prices and QR codes.

"It's definitely made it a lot faster with grabbing things," said Ben Leikness, the digital fulfillment team lead at another store I visited in Wisconsin. "As long as it has a digital shelf label, I can just hit scan, and it flashes right away."

As we were talking about the lights, a Spark driver rounded the corner and picked a Kinder's salt blend that she had activated the tag on.

A shopper reaches up toward a top shelf of spices while pushing a cart in a grocery aisle lined with electronic labels.

"It's so handy," she said of the feature.

Walmart's stores are powering double-digit e-commerce growth, and the digital labels are making order fulfillment more efficient.

A worker pushes a cart stacked with blue bins down a store aisle filled with merchandise.

In addition to finding exact items more quickly, Leikness said his team spends half as much time hunting down products in the back room after his store installed digital shelf labels last fall. Part of the reason is that the time workers used to spend updating price labels can now be spent making sure shelves are stocked.

The iconic paper price signage that marks large displays isn't going away — yet.

Shoppers walk past a display of Hershey's boxes under a rollback sign.

Walmart told me it has some tech in the works for this kind of display, but that's not rolling out yet.

Another store I visited had midsize displays with clearer product information than I'm used to seeing on conventional labels.

Folded athletic clothing sits beneath a digital sign showing rollback prices for bras, leggings, and capris.

I generally found these electronic displays easier to read than their paper-based counterparts.

The main benefit for in-store shoppers right now seems to be more confidence that the price on the shelf is the same or better than what's online.

A close-up shows a pile of black and white electronic shelf labels stacked together.

The addition of the flashing LED option would likely be a welcome feature when it finally rolls out. In the meantime, store employees are being reassigned from adjusting prices to assisting shoppers.

Online shoppers — who never come into the store — stand to benefit most, since their orders can be fulfilled more quickly.

A shelf of copy paper boxes features an electronic price tag.

While I understand why people might be uneasy about this new technology, Walmart's approach isn't really built for selectively setting prices. It looks like the larger impact would be time savings for workers, which would also benefit shoppers.

Digital labels enable everyone — shoppers, employees, and the company — to get on the same page.