This audio is automatically generated. Please let us know if you have any feedback.
Diving certificate:
- Two US Senators called Kroger for further information and justification for the introduction and use of electronic shelf labels, claiming that the technology enables stores to “time price increases to achieve maximum profit.”
- In addition to concerns about pricing, senators pointed out that Kroger’s shelf label technology allows the grocer to “collect and exploit sensitive consumer data.”
- When asked for comment on the letter, Kroger said, “Any test of electronic shelf labels is designed to lower prices for customers where it matters most. To say otherwise is untrue.”
Diving insight:
While ESLs allow grocers to engage in dynamic pricing, they also exploit consumers at a time when revenue spent on groceries is at a 30-year high, Senators Elizabeth Warren and Robert P. Casey Jr. wrote in an Aug. 5 letter to Kroger Chairman and CEO Rodney McMullen.
The senators pointed out that these devices open up the possibility of large food companies “abusing their power and suddenly driving up food prices” at times when certain products are most in demand. The widespread use of ESLs and dynamic pricing would also result in consumer goods “being priced like airline tickets,” Warren and Casey wrote, citing Marketplace.
Kroger dismissed consumer concerns about pricing, saying the company strives to lower prices for its consumers over time and that doing so leads to increased revenue for the company.
Kroger’s ESL device, called Enhanced Display for Grocery Environment (EDGE) Shelf, also threatens consumer privacy, according to the senators. In collaboration with Microsoft, Kroger plans to attach cameras to its EDGE Shelf displays and use facial recognition to determine information about its customers, including gender and age, and provide them with personalized offers and advertising, the letter said.
The senators wrote that they were “concerned about whether Kroger and Microsoft are adequately protecting consumer data and that customers will ultimately be offered worse terms as Kroger expands the personalized customer experience.”
Kroger’s emailed statement did not address the senators’ concerns about the alleged threat to consumer privacy.
Warren and Casey have asked Kroger to answer more than 10 questions by August 20 defending and explaining the use of ESL technology, including:
- What is the average percentage change in price of all items dynamically priced using EDGE during the first six months of using the system?
- Has Kroger ever used EDGE to change the price of an item more than once in the same day?
- Do customers have the opportunity to object to the collection of personal data by ESL platforms?
- How will Kroger ensure that when providing personalized pricing, it does not use customer data associated with ESL platforms to discriminate against customers based on protected classes such as race, gender or age?
The letter comes as retailers accelerate the adoption of ESLs. Walmart announced in June that plans to introduce electronic shelf labels in 2,300 stores by 2026. Last month, Instacart said it would Introduction of the pick-to-light functionality of its Carrot Tags chain-wide with Schnuck Markets.
This is not the first time grocers have faced concerns about whether their technology initiatives are putting consumers at a disadvantage. In late 2022, a coalition of consumer rights and public interest groups called on grocers to Rethink digital-only offeringsand claims that they may violate the Federal Trade Commission Act and could cause non-digital consumers to overpay during times of high inflation.
