They only last 5 years. The an electronic label has to cost more both environmentally and financially than ~500 paper labels.
Well, I don't know about environmentally, but nothing suggests that they cost more (financially) than paper labels. If there wasn't an overall benefit, why would the stores use them?
What's the failure mode?
I doubt it, especially as they're not going to keep these labels forever. I would be interested is seeing real numbers, but I would bet you'd need A LOT of price changes to a product to offset the (monetary, carbon, ...) cost of the electronic label.
It depends on how often you change prices, how many stores you have, and where the paper labels would be printed. For many stores now who have an online and physical presence where there's constant price pressures from all sides may change prices every day or even more often than that. The cost of the electronic label can be significantly less than printing labels, shipping them, then paying a worker in every store to manually change them.