Will Electronic Price Labels Tempt Stores to Try 'Dynamic Pricing'?

"Electronic shelf labels are already common in Europe," reports the Los Angeles Times, "and will become wider spread in the U.S., with Walmart planning to implement the labels in 2,300 stores by 2026." And grocery giant Kroger also plans to introduce digital labels. But will they also bring "dynamic pricing", where stores raise the price of ice cream on hot days - or jack the cost of water and canned goods before upcoming storms?Kroger and Walmart said they have no plans to implement dynamic pricing, and added that electronic shelf labels will only be used to help lower costs. "Kroger's business model is to lower prices over time so that more customers shop with us," a Kroger spokesperson said. "Any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true." A Walmart spokesperson said updates to the electronic tags will be used to reflect lower prices for items on sale or final clearance. Prices will not change throughout the day, she said... Grocery industry analyst Phil Lempert said the digital tags will help save time and money amid a labor shortage, but they could lead grocery chains down a slippery slope. "If you can make it electronic you can take a lot of costs out of the system, and that's great," Lempert said. "But once that's installed, and regardless of what any retailer is going to say, it's now easy to change prices." Santiago Gallino, a professor specializing in retail management at the University of Pennsylvania, said he hasn't seen signs that retailers plan to use electronic shelf labels for surge pricing. "In my conversation with retailers, it's clear that those who are pushing towards this technology are mainly trying to drive efficiency up in the stores and try to reduce costs," Gallino said. "Grocery retailers operate on very thin margins, so every time they find technology that can help them save in labor, they will do that." What grocery stores save in labor they may lose in customer trust and loyalty, however, said Dominick Miserandino [CEO of the retail disussion forum RetailWire.] "Consumers are exceptionally skeptical," he said. "When most of the consumer reaction to any product seems to be overwhelmingly negative, it's probably a product that one might want to reevaluate quickly." The article notes one U.S. presidential candidate has already pledged they'd "work to pass the first-ever federal ban on price gouging on food."

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