Supermarket chain ‘inflates’ prices on shelves

Kroger, the largest supermarket chain in the United States, is under investigation for using electronic tags on its store shelves across the country. U.S. Senators Elizabeth Warren and Bob Casey have announced that they are looking into the practice to see if the chain is raising prices.

So-called “dynamic pricing” is common in other industries, such as airlines, hotels, and ride-sharing services like Uber. Customers pay more or less depending on demand.

However, it becomes particularly controversial when the debate reaches everyday staples like groceries and raises concerns that companies may start forcing customers to pay more during peak times and periods.

Kroger isn’t the only big name using this technology. Walmart, the largest retailer in the United States, announced in June that it plans to introduce digital shelf labels in thousands of stores.

In a letter to Kroger CEO Rodney McMullen, the senators expressed concerns that the technology could be used to trick customers and raise grocery prices during peak hours.

Kroger began testing the technology in 2018 and has since expanded it to 500 stores across the United States.

The Cincinnati Enquirer reported that senators asked the chain for information on how the technology was used and its rationale.

Supermarkets with “dynamic pricing”

“These digital price tags could allow Kroger and other grocery chains to move to ‘dynamic pricing,’ where prices for household staples can rise based on the time of day, weather, or other transient events, allowing stores to calibrate price increases to maximize profits at a time when the amount of American income spent on food is at a 30-year high,” Warren and Casey wrote in their letter.

The senators noted that analysts have suggested that widespread use of dynamic pricing could lead to groceries and other consumer goods becoming “like airline tickets,” adding that it would create a sense of urgency and scarcity that would allow consumers and retailers to “extract the maximum profit possible from each customer.” Kroger, which operates 2,750 stores in 35 states, said its strategy is to lower prices to attract customers.