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Dynamic pricing appears to working at the grocery level — as long as it’s used to lower prices.
An article in The Wall Street Journal pointed out several benefits for retailers:
- Time and cost savings: Using electronic shelf labels to instantly update prices promises to eliminate the cost and time required to print out and place new price stickers. Speaking at the National Retail Federation's 2025 Big Show, Cedric Clark, Walmart’s EVP of U.S. store operations, said using digital shelf labels removes a “tedious task” facing store associates while enabling them to further engage in-store shoppers. He said, “Can you imagine just pulling out your phone and about two clicks in, it actually changes those prices… just hit that button."
- Reducing food waste: Albert Heijn, a grocer in the Netherlands and Belgium, saves around 550,000 pounds in food waste annually by using dynamic pricing to gradually clear expiring perishables. According to the WSJ, store associates highlight items about to expire, causing an electronic in-house pricing system to check every 15 minutes as to how they are selling, and whether further discounts are needed. The article states, “Prices on any one item are cut a maximum of four times in a day, with discounts starting at 25% before expanding as needed to 40%, 70% and finally 90%.”
- Competitive pricing: Similar to online pricing, dynamic pricing is used by REMA 1000, a Norwegian grocer, to reduce prices at the store level on between 50 and 300 items each day — concentrating on seasonal items — to keep prices competitive. The grocer’s head of pricing, Partap Sandhu, admits to WSJ, “We lower the prices maybe 10 cents and then our competitors do the same, and it kind of gets to [be] a race to the bottom.”
At REMA, in-store shoppers only see price cuts. Any increases are made when stores are closed.
Dynamic Pricing Remains a Contested Concept in Retail
Despite the potential for in-store shoppers to benefit from continued lower prices, the roll out of electronic shelf labels has driven concerns from officials in the U.S., as well as those overseas, that dynamic pricing will be used for Uber-like surge pricing, or temporarily hiking prices as a result of increased demand or limited supply.
A U.K. trade official, Jonathan Reynolds, recently wrote on social media, “The picture is that when it is hot, the price of barbecues is going into the boom and the customers are being punished because of the good weather. Could you see a world in the future where Tesco and Sainsbury's will use electronic labelling for pricing of demand in that way?”
Kroger and Whole Foods told the WSJ they don’t use electronic shelf tags for dynamic pricing, while Walmart declined to comment.
A study from the University of California Rady School of Management found no evidence that electronic shelf labels was leading to price hikes. The authors also felt anxiety over surge pricing was overblown, since trust in pricing is critical at retail.
“Unlike Uber or hotels, grocery stores don't make money on a single item—they make money on your entire basket and your long-term loyalty,” said Ioannis Stamatopoulos, a co-author and a professor of information, risk, and operations management at UT Austin’s McCombs School of Business, in a statement.
“Using surge pricing could alienate shoppers and drive them away permanently, which is the last thing grocers want," he added.