In a recent study, digital price tags, which are becoming more prevalent in American supermarkets, are shown not to drive demand-based pricing surges. The study reviewed five years of price data from a particular grocery chain.
Despite these findings, skepticism remains among some consumers, advocates, and lawmakers regarding these small electronic screens. These devices allow stores to alter prices immediately via a central computer, negating the need for manual label changes by employees. Dan Gallant, employed in sports media in Edmonton, Canada, remarks on this technological shift at his local Loblaws supermarket, noting the growing divide it highlights between corporations and individuals.
Social media platforms are rife with debates that supermarkets might use such technology to manipulate prices according to weather conditions or gather customer data. In response, US Senators Elizabeth Warren and Bob Casey questioned Kroger last autumn about whether they would employ electronic labels for dynamic pricing. Legislative actions are underway too, with bills introduced in states like Rhode Island, Maine, and Arizona either to regulate or entirely prohibit these digital labels. Arizona state Representative Cesar Aguilar has voiced concerns about potential misuse by stores through unpredictable price shifts.
However, recent research contradicts these anxieties. A study released in late May, conducted by researchers from the University of Texas, the University of California, and Northwestern University, found negligible evidence of price hikes linked to the use of electronic shelf labels. Analyzing prices from 2019 to 2024 within an anonymous grocery chain, the study detected that before digital labels, temporary price rises affected 0.005% of products daily, which only saw a slight increase to 0.0006% after digital tags were employed. Furthermore, discounts appeared slightly more frequent after digital labels were implemented.
Economists have long wondered why grocery prices remain relatively stable. One contributing factor might be the labor required for price changes, as noted by Ioannis Stamatopoulos, one of the study’s authors. He emphasizes that because grocery purchases are recurrent, unlike one-time buys like furniture, stores avoid frequent price shifts to not alienate repeat customers.
Though not new, electronic price labels have seen sluggish adoption in the U.S., with a mere 5% to 10% of supermarkets choosing this technology compared to 80% in Europe, as stated by Amanda Oren from Relex Solutions. A significant barrier remains cost, given that each store item, of which there are usually over 100,000, requires a separate digital tag ranging from $5 to $20 each.
Nonetheless, the U.S. is advancing towards digital integration. Retail giants such as Walmart aim to install digital tags in more than 2,300 stores by 2026. Kroger plans to ramp up digital label use across more locations this year, and Whole Foods is trialing them at approximately 50 stores. These labels offer advantages like speedier price adjustments; Walmart, for example, reduced label change time from days to minutes.
Beyond pricing, some digital labels provide added services like recipe links and nutrition information. Instacart uses digital tags to assist shoppers in locating items. Meanwhile, Albert Heijn, a supermarket chain operated by Ahold Delhaize, is piloting an AI-driven tool in the Netherlands and Belgium that updates prices every 15 minutes for goods nearing expiration — a system that has significantly cut food waste.
Nevertheless, skepticism persists. Senators Warren and Casey have voiced concerns over potential privacy violations from integrations with technologies like facial recognition. Kroger denies any link between its digital labels and such technologies, emphasizing its focus on reducing prices to draw in more customers.
In Arizona, Aguilar opposes digital labels not only because of concerns about pricing ethics but also due to potential job loss. He notes that despite reduced staffing, grocery prices continue to rise. Reflecting the views of many constituents, Aguilar advocates for community employment within stores.
Conversely, Oren from Relex Solutions suggests that the aim of digital labels is not about cutting labor costs but optimizing workforce usage across the store for more productive tasks, rather than repetitive duties.