As food prices continue climbing higher and higher, legislators are taking grocery stores to task for rolling out electronic shelf labels that allow surge pricing on demand.
U.S. Senators Elizabeth Warren (D-MA) and Bob Casey (D-PA) recently sent a letter to Kroger CEO Rodney McMullen questioning the grocer's use of electronic labels and digital price tags, which can be instantly changed based on temporary factors such as the time of day or the weather.
"It is outrageous that, as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out surge pricing and other corporate profiteering schemes," the lawmakers wrote. "For example, stores may use this technology to raise the price of turkeys in the days leading up to Thanksgiving, or the price of ice cream on a hot day, causing customers to face unexpected price hikes when they reach the grocery aisle and find themselves unable to afford the groceries that they had originally budgeted for."
By updating price tags with the simple click of a button, the lawmakers say grocery stores can price gouge customers, suddenly raising costs at times when certain products are in highest demand.
"Widespread adoption of digital price tags appears poised to enable large grocery stores to squeeze consumers to increase profits," the lawmakers wrote. "Analysts have indicated that the widespread use of dynamic pricing will result in groceries and other consumer goods being 'priced like airline tickets,' 'creat[ing] a sense of urgency and a sense of scarcity that wouldn't exist if there were just publicly posted prices that everybody understood,' and allowing 'sellers…to … figure out ways to extract the maximum amount of profit from each customer.'"
Many grocery chains have rapidly expanded their use of digital displays instead of traditional paper tags in recent years, according to the lawmakers. Kroger began using the technology in 2018 and has since expanded it to 500 stores nationwide.
The lawmakers are worried that Kroger's device, created through a partnership with Microsoft and known as the Enhanced Display for Grocery Environment (EDGE) shelf, may enable the company to "gather data on customers to determine how much price hiking they can tolerate and then present each customer with personalized price tags at the grocery shelf."
“I am concerned about whether Kroger and Microsoft are adequately protecting consumers' data, and that as Kroger expands the personalized customer experience, customers will ultimately be offered a worse deal,” the lawmakers wrote.
When Kroger rolled out its EDGE shelf in 2018, it said the system would display digital prices, deals of the hour, nutritional information, allergy data and more, right on the shelf. It did say the system would utilize dynamic pricing in certain instances, such as pricing seasonal produce closer to real-market values or launching special promotions and flash deals.
The lawmakers requested that Kroger provide information about its usage of EDGE to conduct dynamic pricing and collect sensitive consumer data. The grocer has not publicly commented on the letter.