Lawmakers fear the use of electronic shelf tags could lead to sudden price hikes and consumer exploitation, while also raising serious privacy concerns with data collection practices.
Two Democratic senators, Elizabeth Warren and Bob Casey, have initiated an investigation into Kroger’s use of digital price tags, which allow retailers to change prices instantly. This technology, known as “electronic shelf tags,” has been under scrutiny due to concerns that it could be used to exploit consumers during times of high demand by enabling dynamic pricing strategies.
The senators argue that major grocery chains, including Kroger and Walmart, are gearing up to utilize dynamic pricing in a way that “squeezes consumers to increase profits.”
In a letter sent to Kroger, Warren and Casey express concerns that these practices could make groceries and other essential goods “priced like airline tickets,” encouraging a sense of urgency and scarcity that wouldn’t exist with traditional pricing. According to analysts cited in the letter, this could lead to unpredictable and inflated prices, particularly when demand surges for specific items.
Kroger, the largest grocery chain in the United States, has been testing these electronic price tags since 2018 and expanded their usage to 500 stores last year. Meanwhile, Walmart announced plans to implement digital price tags in 2,300 locations. Kroger is also seeking to significantly grow its presence through the acquisition of Albertsons and Safeway, potentially bringing thousands of new stores under its control.
In a statement provided to FOX TV Stations, Kroger refuted the accusations, claiming that its business model is centered on lowering prices over time. The company argues that this strategy attracts more customers, thereby increasing revenue, which it reinvests in lowering prices, improving wages, and enhancing the shopping experience. “Any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true,” a Kroger spokesperson stated. Walmart did not immediately respond to requests for comment.
Despite these assurances, Warren and Casey remain skeptical, characterizing digital pricing as another “profiteering scheme” aimed at exploiting consumers who are already facing high grocery costs. The price of an average food basket in July increased by 3.1% compared to three months earlier and was 2% higher than the previous year. According to the senators’ letter, Americans currently spend around 11.2% of their budget on groceries, which underscores the financial pressure many families are under.
The senators also expressed concern over the potential misuse of dynamic pricing during peak periods, citing examples such as the possibility of stores raising turkey prices before Thanksgiving or increasing ice cream prices on hot days. Such practices could lead to unexpected cost hikes, catching consumers off guard when they reach the checkout and potentially making it difficult for them to stick to their planned budgets.
The digital price tags also raise privacy concerns, according to the report from Fox News. As noted in the letter, Kroger’s partnership with Microsoft involves placing cameras near these displays that can use facial recognition technology to assess a customer’s gender and age, subsequently offering personalized deals and advertisements.
The technology could enable Kroger to collect extensive data on customers, building detailed profiles that could be used to determine how much of a price increase each customer might tolerate. This has sparked fears that the company could engage in targeted price hikes, further burdening already struggling households.
Warren and Casey criticize these practices as “outrageous,” especially during a time when many families are struggling to afford basic necessities. As families continue to stretch their budgets to put food on the table, the introduction of such technologies and the potential for their misuse only adds to the financial strain, the letter concludes.
The senators’ investigation highlights the broader debate surrounding the balance between technological innovation and consumer protection, particularly in an industry as vital as food retail. The claims made in the letter are based on the statements and data provided by Sens. Warren and Casey and information obtained from Kroger’s own reporting. The evolving situation continues to raise important questions about how retailers plan to leverage new technology and the impact it may have on consumers.
