Two MPs have expressed concern that food retailers could start using electronic shelf labels (ESLs) to rip off consumers or charge so-called “premium prices”.
“Increased use of dynamic pricing will drive up corporate profits – leaving consumers to foot the bill,” wrote U.S. Senators Elizabeth Warren (D-Massachusetts) and Bob Casey (D-Pennsylvania).
The letter was specifically aimed at Kroger and highlighted the company’s use of customer data and personalization of the customer experience.
“I am concerned about whether Kroger and Microsoft are adequately protecting their customers’ data and that customers will ultimately be offered worse terms as Kroger expands the personalized customer experience,” the letter said.
Retailers have been using ESLs for years. As far as I can remember, Whole Foods is the first major retailer to use them, and big names like Hy-vee and Schnucks are joining the ranks. The biggest of all – Walmart, based in Bentonville, Arkansas – announced in June that it plans to use them in 2,300 stores.
While I know Kroger is a master at capturing customer data and insights, all this fuss seems more like an exaggeration to grab headlines than reality. Remember when Wendy’s came under fire for its dynamic menu board? The media seized on the “surge pricing” move, and executives quickly clarified that the digital menu boards were being used to change menus based on the time of day and offer special deals.
Most fast food chains are desperately trying to lure back their customers with special offers. A price increase would currently be detrimental to business.
ESLs take away one of the most tedious tasks a grocer faces. Changing paper price tags is extremely time consuming, and the ability to change prices with the click of a mouse when the weekly display goes into effect saves valuable man hours, one of the biggest challenges for any retailer.
Could grocers use ESLs to enforce “surge” pricing? Possibly. But one of the best cases I’ve heard of using this technology is actually to lower prices—and prevent food waste.
A study by the Rady School of Management at UC San Diego found that implementing dynamic pricing can reduce food waste in grocery stores by 21% or more.
Retailers who adjust their prices based on inventory and expiration dates saw a 21 percent reduction in waste and a 3 percent increase in gross margin.
This process will be facilitated by the introduction of dynamic pricing via ESLs. As product labelling evolves, more information will progress even further.
They were also used to offer special shopping times with discounts for protected groups such as seniors.
While I think it would be appropriate to take a look at the rampant shrinkflation in the food retail sector, we should probably be a little more cautious in our Luddist view of ESLs.
