Along with being the world’s largest brick-and-mortar retailer, Walmart is also the nation’s biggest grocer. As a result, the company’s plan to replace paper price tags with digital shelf labels in all U.S. stores by the end of this year is making waves and triggering fear that electronic pricing tools could make food shopping even more expensive for inflation-weary Americans.
Walmart isn’t alone in its push to digitize the humble price tag. The Cincinnati Enquirer recently reported that Kroger, the second-largest grocer in the country, has already rolled out digital tags in nearly 25% of stores. Retail experts predict that digital tags will become increasingly prevalent as more supermarkets adopt the technology.
The stores say being able to change dozens or hundreds of prices with a few clicks of a mouse frees up time and labor for other uses. (It also raises the possibility that stores will need fewer workers in the future, one reason why supermarket labor unions are in fierce opposition.)
Consumer advocates and lawmakers, including Elizabeth Warren, D-Mass., warn that grocers — and Walmart in particular — could exploit the power to instantly change prices. They say the big-box behemoth could eventually feed the vast trove of consumer data it collects into AI-powered algorithms, allowing it to display individualized prices to shoppers — potentially even changing the price between the time a shopper puts an item in their cart and scans it at checkout.
Public sentiment can also be a potent force, observes Jeffrey Moriarty, executive director of the Hoffman Center for Business Ethics at Bentley University in Waltham, Massachusetts.
“The social outrage factor will probably play in at a social level. People really don’t like this,” he says. “The lack of transparency bothers people.”
Voting with your wallet can be an effective way to send a message. Individual shopper decisions might not seem significant, but once a change in consumer behavior hits critical mass, ordinary people can effectively “forc[e] the market to do something by shopping around,” he says.
Dynamic vs. surveillance pricing: What’s the difference?
Experts in retail technology say it’s important to understand the distinction between dynamic pricing — which has been used by companies like airlines and hotels for decades — and the kind of individualized, algorithmic price-setting opponents call surveillance pricing.
What’s coming to grocery store shelves is the former. Does the rollout of electronic shelf labels mean that prices will jump in the amount of time it takes you to grab peas and peanut butter? Probably not, according to the experts, although shoppers should expect price adjustments — many of them minor — to become more widespread and frequent.
Online shoppers, take note: Retailers are more likely to personalize prices using a slew of data points on digital platforms like websites and apps. An investigation last year conducted by consumer watchdog groups found that shoppers using grocery delivery platform Instacart saw price discrepancies as high as 23% for the same groceries.
Instacart characterized the findings as “tests” and pledged to stop conducting them, but the disclosure prompted lawmakers across the country to introduce legislation aimed at curbing surveillance pricing; to date, Maryland, New Jersey and Connecticut have passed laws restricting the practice.
What can you do about it?
Money asked experts for advice about how frugal and frazzled shoppers can avoid an unpleasant surprise at the payment terminal besides shopping at farmers markets or mom-and-pop grocers.
“When you engage in a transaction, there’s almost always… a gap between the lowest [price] they’re willing to sell it for and the highest price you’re willing to buy it for,” Moriarty says.
For much of human history, transactions entailed haggling. Ironically, cutting-edge technology is bringing commerce back to the bazaars of yore.
“We thought when we’re shopping in a store that we’ve left all that behind, that the price which is shown is the price for everyone — that there’s not this boxing match,” Moriarty says. “The truth is, the game is on again.” This means shoppers need to adopt the mentality of browsing wares at a flea market. Here’s how experts say this digital-era version of haggling works.
Think like an early bird.
With greater adoption of dynamic pricing, “Supply and demand is really, really going to influence things,” says Shampaigne Graves, founder of consulting firm Women’s Research Solutions. As anyone who’s tried to book a flight over a holiday knows, when demand is high, the supply available will be priced accordingly.
“Understand your grocery store and their stocking cycles,” she says. Align your grocery runs when merchandise availability is at its peak, she advises, because “I would imagine the prices would be much lower if there is dynamic pricing happening within that store.”
Wait to buy perishables.
Supermarkets regularly slap discount stickers on meat and dairy products with imminent “sell by” dates. Thomas McMillan Jr., marketing professor of practice and director of the Center for Retailing Innovation at Texas A&M University’s Mays Business School, says digital signage could give stores flexibility to make more gradual adjustments, with discounts deepening as the expiration date neared.
If you’re planning to cook burgers for your family on Friday, for instance, you might be able to score a better deal on ground beef bought on Thursday rather than Monday.
Snap a picture.
If a great bargain catches your eye, take a quick photo of the price tag. If you get to the checkout lane and find that your deal is ringing in for a higher amount, ask to have the lower price honored. Pro tip: If there’s a QR code, make sure the image shows it clearly so an employee can scan it if necessary.
Don’t get in a rut.
We’re creatures of habit, never so much as when we’re rushing through a tedious weekly chore. But zoned-out complacency is exactly what stores want. “The lesson to shop around still applies,” Moriarty says. “It would be unwise to let yourself get into a groove with one particular vendor.” On the other hand, he says, if you buy the store brand when the price of something you buy regularly goes up, that sends a strong message to retailers by signaling to the algorithm that you’re a price-sensitive shopper.
“Being open to trying alternative brands is going to be really important,” Graves says. “These retailers are banking on you buying the same thing every single time.”
Don’t let store apps play secretary.
They can help you keep your shopping organized, but letting a retailer’s app build your shopping list can come at a cost, Graves warns.
“They’ll create a list of your most purchased items and encourage [you] to buy it again,” she says. And they definitely won’t comparison-shop for you. “You could be spending more money because the apps are… going to push the name brand,” she notes.
Watch those repeat purchases.
It’s easy to tap a “buy again” prompt or grab something off the shelf without looking, but regular or auto-buy purchases can be a stealthy way for a retailer to sneak in price increases, McMillan says.
“Kind of keep an eye on that… This is true in-store and online — know the prices of the top 10 to 15 items you buy every week,” he says.
Actually go into the store.
If you order from the store’s app, even if you opt for curbside pickup, you might be paying more than if you walked the aisles yourself.
“The problem is, [shoppers] get sucked in the convenience trap,” McMillan says. “If you’re consistently a buy-online-and-pick-up shopper… you may see higher prices,” he advises. “Compare channels, [because] that’s a real area where the pricing can vary.”
Don’t automate substitutions.
If you do shop via app for curbside pickup or delivery, though, don’t automatically authorize the store to swap in alternatives if your preferred brand of a particular item is out of stock, Graves says. There’s a good chance you’ll wind up with a pricier product, because the substituted item is likely to be another name brand rather than the store brand.
