No matter how much the Biden-Harris Administration downplays and denies it, food prices are rising and Americans are struggling to put food on the table. Americans are spending the highest percentage of their income on food in the past 30 years, and that shows no signs of slowing. By the end of last year, the average person was spending 25% more on the same grocery store items than they had four years earlier.
The trend continues: food prices have already risen by an average of 1.1% through June this year, and they show no signs of slowing down. There are many reasons for this increase, including rising transport costs, rising minimum wages and increasing input price pressures, but there's another factor that should dread anyone who loves to eat: dynamic pricing.
Kroger claims the ESL system is undercutting shoppers' prices.
A recent letter from Senators Elizabeth Warren (D-Mass.) and Bob Casey (D-Pennsylvania) to the CEO of grocery store chain Kroger raised concerns about the potential for price gouging through electronic shelf labels.
They Claim Chains like Kroger “use electronic shelf labels (ESLs) to inflate grocery prices and exploit working families. Digital tags allow companies to implement dynamic pricing — changing the price of items based on temporary factors like time of day or weather.”
Consumer Choice Center Media Director Steven Kent disagrees, saying, “Senator Elizabeth Warren has actively misled the media about Kroger's implementation of electronic price tags in many of its stores. In theory, dynamic pricing should be possible with the push of a button, but there is no evidence that they have actually done so. Surge pricing is a staple in hospitality, entertainment and transportation, and in a free market, we would expect to see it in the grocery industry as well.”
Paper labels take a long time to review and change, but ESLs can be changed in seconds. Kroger, the largest grocery chain in the United States, has used the technology in some locations since 2018 and now has it in about 500 stores nationwide, while Walmart has it in about 2,300 locations. Surge pricing is nothing new to ride-sharing apps or online travel bookings, but bringing it into everyday activities like buying essentials and shopping is another assault on consumers who are already tightening their purse strings.
Kent disagrees. “In-the-moment adjustments based on supply and demand are not malicious. If a truck delivering watermelons to a Kroger store flips over and cuts off the supply, why don't the stores charge a premium for the watermelons they have in stock? Consumers aren't going to buy a product that is priced higher than they're willing to pay.”
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But the ability to change prices so rapidly seems like it could lead to even greater potential dangers as technology like facial recognition is deployed to gauge customer demographics and purchasing habits, encouraging restaurants and grocers to squeeze every last penny possible out of consumers and track their every move. This isn't speculation or “what if.” Kroger and Walgreens are already Sued This is part of a broader trend towards using facial recognition technology without consent.
Corey Mintz explain Examples of AI-driven food chains:
McDonald's has been testing AI since 2019, using license plates to identify returning customers (with consent) and customize order suggestions at the drive-thru. More recently, Point Jupiter piloted facial recognition software within McDonald's ordering kiosks, successfully scanning users' faces to identify “gender, estimated age and emotion” and make meal recommendations.
Part of the goal is to target working people at the times they're hungriest and closest to drive-thrus and to better track users' buying habits as they shop for groceries. Both Casey's proposed Stop Price Gouging and Stop Shrinkflation Act would give the Federal Trade Commission and state attorneys general the power to enforce rules against this, such as banning restaurants and businesses from selling small amounts of food at the same price.
a 2023 UCLA Analysis The ESL study concluded that “increased retailer profits may not offset the decline in consumer welfare, potentially reducing social welfare below status quo” and further argued that “time-based pricing creates value for stores (through higher prices).” [but] There is no benefit to the consumer.”
But Kent says these concerns are overblown and political. “ESLs allow stores to more easily restock shelves and rearrange products, as well as to quickly lower prices during corporate-to-independent sales. We all know that grocers regularly cut prices on popular items, so the focus on price increases is misplaced.”
Some states, such as Illinois, have enacted stricter privacy laws regarding the misuse of facial recognition, but surge pricing, which can quickly creep into dynamic pricing, remains a major issue.
“In addition to price gouging, EDGE Shelf also helps Kroger collect and use sensitive data about consumers.” Claim Warren and Casey: “Through its Microsoft partnership, Kroger will install cameras in its digital displays and use facial recognition tools to determine the gender and age of customers seen on camera in order to present them with personalized offers and ads.”
Kroger claims the ESL system is undercutting shoppers' prices. In a statement to The Blaze News, A Kroger spokesperson responded, “Kroger's business model is to lower prices over time to get more customers to shop with us. This increases our revenue, which we then invest in lower prices, higher wages and an even better shopping experience.”
Kroger emphasized that “everything we do is designed to support this strategy, and customers are shopping at Kroger more than ever because we're fighting inflation and offering great value. Our test of electronic shelf labels is to further lower prices for our customers who matter most. To claim otherwise is untrue.”
