More and more businesses are examining how to use AI and other emerging technologies. That includes grocery chains, who have started to employ electronic shelf labeling to instantly change prices. But some worry it could further dynamic pricing and create individualized prices at the register.
Major retailers like Walmart and Whole Foods are ditching printed price labels for digital ones at many of their stores. It’s more than a cosmetic change said Ademola Oyefeso, vice president of the United Food and Commercial Workers Union.
“If you've ever ridden in a ride share vehicle, where you're out at a baseball game, and the baseball game ends, you search and you try to leave, there's a surge pricing on it," said Oyefeso. "So this technology will allow grocery stores to do the same thing."
Currently, most major retailers who use electronic shelf labeling set prices for an entire region. But coupled with data collection tools and AI, Oyefeso warns electronic shelf labels can be used to create individualized prices for shoppers.
“There's a lot of information [stores] collect about me from whether it's from my phone, from my loyalty program, just my credit card, my address, my name, these companies have access to it all, and there are very little controls around this," he said.
Charles Lindsey, Ph.D, is an associate professor with the University at Buffalo’s School of Management. He's a national expert on retail marketing and consumer behavior.
“[Electronic shelf labels] just makes what they've always been doing and what they've always wanted to do, it just makes it easier to do and they can do it more quickly,” Lindsey said.
But when that pricing strategy turns into using personal shopper data is when it runs into a legal gray area. In New York, companies can use personal data to set prices, but they must disclose it. A state bill, supported by Oyefeso and the UFCW, would make what they call “surveillance pricing” illegal.
“The people who can least afford it are the ones who will get hurt the most. Because if you're sitting in a well to do neighborhood, you never have to worry about the price going up because you can absorb those increases," said Oyefeso. "But in poor neighborhoods, when you put these in, people on fixed incomes, inflation is a real thing.”
The use of zip codes and biometric tools in consumer tracking lead Oyefeso and consumer protection advocates to believe race, gender, age and income level could eventually play a role in surveillance pricing.
As various legislation floats on the state and federal levels, Lindsey said consumers still have what economists call “dollar votes.”
“I don't see it going to that extreme, because I think of the ethical implications, and especially the cost benefit analysis, and I think most retailers right now would probably perceive that the cost of doing that in terms of negative publicity, and so on and so forth, would outweigh any incremental operating profit that would be gotten from from using it in a one-on-one fashion," said Lindsey. "Is it possible in the future that some retailers go that route? I think anything's possible."
Trust plays a factor in the retailer-consumer relationship. Lindsey believes that soon, you'll see some stores drawing a very public line in the sand hoping to win over shoppers dissatisfied with increased data-driven pricing.
“They will issue statements both in the press and they will advertise this, and they'll post it on their doors and in their stores that we don't engage in real time, dynamic or surge pricing, based on changes in consumer demand and so on and so forth," he said. "Yes, we'll mark a price down if it's getting close to the expiry date, because we're giving you a better deal. Good for us, good for you.”
