Image Courtesy of Walmart
Walmart, Kroger Deny ‘Surge Pricing’ Claims Following Digital Price Tag Adoption
October 25, 2024
Walmart and Kroger have both denied engaging in “surge pricing” amidst reports that members of Congress have accused the two retail giants of engaging in the controversial practice.
The New York Times is reporting that the Congressional claims are that digital price tags being used by Kroger and other large supermarket chains may enable dynamic pricing, which would allow the sticker price of products like milk and eggs to fluctuate on a regular basis. Additionally, they assert that Kroger’s facial recognition data may be taken into account for setting prices.
Kroger refuted the allegations, stating that it has no intention of using facial recognition technologies or dynamic pricing. Walmart did not clarify whether the technique was being used for other purposes, but it did state that it had no intentions for dynamic pricing and that facial recognition was not being used to influence price.
Both Kroger, which has around 2,800 locations in the United States, and Walmart, which has 4,606 locations, have indicated that the impacts of digital price tags are being overstated. According to economic analysts, most food bills won’t increase as a result of the tags. However, the widespread adoption of new technologies in grocery stores has raised concerns among data protection specialists.
Senators Elizabeth Warren of Massachusetts, Bob Casey of Pennsylvania, and Representative Rashida Tlaib have written letters in recent months expressing worries about the possibility that Kroger, Walmart, and other retailers could utilize digital price tags to boost prices at the touch of a button.
Additionally, the legislators voiced their worries that facial recognition technology might be used to gather consumer demographic information and increase pricing according to “protected classes, such as race, gender, or age.”
Walmart and Kroger Aren’t Alone
Walmart and Kroger aren’t the only retailers that are allegedly engaging in surge pricing. Earlier this year, Wendy’s came under fire after its CEO announced that it, too, would be interested in engaging in the practice, citing the success of Uber in doing so.
During a call with investors, Wendy’s CEO Kirk Tanner revealed this novel pricing strategy. Tanner stated that testing of the dynamic pricing approach will begin in 2025. The concept is straightforward: prices will be reduced at slower hours and raised during busy mealtimes, such as breakfast, lunch, and dinner rushes.
The price of a Dave’s Single Cheesebruger, for instance, which is now $5.99 at a Wendy’s restaurant in Newark, New Jersey, might go up by as much as $1 during lunchtime. On the other hand, the price may decrease by as much as $1 below $5.99 during slower periods, such as the middle of the morning or the late afternoon.
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