Digital Price Tags Are Already in Grocery Stores—Is Dynamic Pricing Coming Next?

Anyone who has taken a rideshare service like Uber or Lyft knows that prices are highly dependent on demand. The same goes for booking flights, hotels, and even concert tickets. What if the same thing happened to our food? Despite the reassurance of major grocers, customers are concerned about how this new technology will affect their shopping experience.

Early this year, many were upset when a rumor spread that Wendy's would be introducing a similar dynamic pricing model to that of Uber. The restaurant chain later clarified that its goal was to offer discounts during off-peak hours, not to raise them during busy ones. Other fast food chains have also been accused of implementing dynamic pricing. Burger King has claimed it’s false, while McDonald’s has yet to release a statement on the subject. Now, it seems the same model is coming to grocery stores.

Are Grocery Stores Using Digital Shelf Labels for Dynamic Pricing?

In June, Walmart announced that it was rolling out DSLs, or digital shelf labels. The goal, the brand explained, is to supply 2,300 stores with digital shelf labels (DSLs) by 2026. We’ve previously reported on the best times to score a deal at Walmart, but the truth is that it’s also possible to do the inverse, paying more at certain times, and therein lies the problem. 

Now, word has gotten out that Kroger, which has been using electronic shelving labels (ESLs) since 2018, might be exploiting customers with them. Thanks to ESLs, Kroger has the technology to change pricing based on the time of day or weather. For example, if a storm is coming and customers are scrambling for bottled water, the company has the ability to raise the price at affected stores. Whether it actually will is still up for debate.

The shelving innovation that Kroger uses, made in partnership with Microsoft and called Enhanced Display for Grocery Environment (EDGE), may utilize cameras to make it possible for the company to gather data on individual customers and eventually tailor its price hikes to them and what they can tolerate. This specific plan is in the future, but the question is "How distant a future?"

In an attempt to clear its name, Kroger has already issued a statement: “Kroger’s business model is to lower prices over time so that more customers shop with us, which leads to more revenue that we then invest in lower prices, higher wages, and an even better shopping experience. Everything we do is designed to support this strategy, and customers are shopping more with Kroger now than ever because we are fighting inflation and providing great value. Any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true.”

Why Shoppers Are Concerned About Digital Shelf Labels

Despite Kroger's reassurance that the technology will be used to expedite shelf-stocking and offer consumers lower prices, some customers on Reddit still have their doubts. 

One Redditor said, “Meanwhile, they are telling shareholders that it will INCREASE PROFITS, while telling the public it will decrease prices. Two-faced talk always means lies.”

“I predict that shoplifting at Kroger will go through the roof if one person’s bag of chips is $2.99 and the guy checking out next’s bag is $4.39,” commented another.

Reddit users were concerned about whether these changes were already affecting them. It’s possible but not guaranteed. Kroger is currently using ESLs in about 500 of its stores. According to The Kroger Co., the company operates 2,750 grocery stores under names that include Kroger, but also well-known chains such as Ralphs, Harris Teeter, and Fry’s Food Stores. 

“Other companies will copy this,” theorized one TikTok user. “If everything goes to the Uber model, to where everything you buy is a dynamically adjusted surge price, we’re all going to be paying like three times more for everything.”

It's important to note that Walmart and Kroger are not the first retailers to use DSLs—you can already find these at Whole Foods, Amazon Fresh, the Midwestern chain Shnucks, and many European grocery stores, according to reports.

The DSL trend is certainly gaining traction, and, like all technology, pumping the brakes becomes more difficult once the wheel starts turning. Only time will tell if the potential benefits of the new labeling system will outweigh any pitfalls.