Major Grocery Chain in Louisiana and Texas Under Fire for Pricing, Privacy Concerns

LAFAYETTE, La. (KPEL News) - A grocery chain with stores across Texas and Louisiana is facing scrutiny in the Senate over new electronic shelf tags, which critics say will lead to unfair pricing.

Also of concern to those critics? Privacy issues stemming from small cameras including in some of the new shelf technology.

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Kroger is under fire from U.S. Senators Elizabeth Warren (D-MA) and Bob Casey (D-PA), who are asking for more information regarding new electronic shelf tags (ESLs) that are being tested in some stores.

ESLs allow for stores to practice "dynamic pricing," but the Senators and other critics of the practice say that big corporations use them to jack up prices on customers, which they say allows stores to “abuse their power and surge grocery prices suddenly” at a time when customers are already facing sky-high costs.

“Any test of electronic shelf tags is to lower prices more for customers where it matters most," Kroger replied in a statement. "To suggest otherwise is not true.”

Kroger has promised that it aims to lower costs as part of its pending merger with Albertsons, a merger that is being fought by the federal government.

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Kroger’s ESL device, according to GroceryDive.com, is called Enhanced Display for Grocery Environment (EDGE) Shelf. Sens. Warren and Casey allege that this technology "also threatens consumer privacy," the industry site explained.

"In partnership with Microsoft, Kroger plans to place cameras on its EDGE Shelf displays and use facial recognition to determine information about its shoppers, including gender and age, to push personalized offers and advertisements, per the [Senators'] letter," GroceryDive said.

The Senators are asking the following of Kroger in relation to the use of the EDGE displays.

• For all items that have been subject to dynamic pricing using EDGE, what is the average percentage change in price of those items over the first six months of using the system?
• Has Kroger ever used EDGE to change the price of an item more than one time within the same day?
• Will customers have the option to opt out of the collection of personal data through ESL platforms?
• How will Kroger ensure that it will not use customer data related to ESL platforms to discriminate based on protected classes, such as race, gender or age, when offering personalized prices?

What Is Dynamic Pricing?

Dynamic pricing in grocery stores refers to the practice of adjusting prices for products in real-time based on various factors such as demand, supply, competition, time of day, and even weather conditions. Unlike traditional pricing strategies where prices remain static for extended periods, dynamic pricing allows grocery stores to be more flexible and responsive to changes in the market.

Here’s how it works: If a certain product, like fresh produce or dairy, is in high demand or has limited availability, the store might increase the price to reflect its scarcity or popularity. Conversely, if there’s a surplus of a particular item, prices might be lowered to encourage sales and prevent waste. This strategy helps stores optimize their inventory management.

Technology plays a significant role in enabling dynamic pricing. Advanced algorithms analyze data such as sales patterns, customer behavior, and competitor pricing to determine the optimal price for each product at any given time. Some grocery stores even use electronic shelf labels that can update prices instantly without the need for manual changes.

For consumers, dynamic pricing can mean fluctuating costs for the same item depending on when and where they shop. While it can lead to potential savings if they time their purchases right, it can also result in higher prices during peak demand periods.

The practice allows retailers to be more competitive and efficient, while also offering consumers the potential for both savings and challenges in their shopping experience.

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