Skyrocketing Prices in Aisle Five?
In a recent academic study, researchers from the University of Texas at Austin and other institutions investigated the impact of electronic shelf labels (ESLs) on grocery pricing. The study, which analyzed over 180 million product-level price observations before and after ESL adoption in 114 U.S. stores across four states, found no meaningful increase in short-lived or unexplained price hikes, indicating that surge pricing is not a concern for shoppers at grocery stores using digital price labels [1][2].
Consistent Pricing Patterns Before and After ESL Adoption
The researchers found that the pattern of prices looked almost exactly the same before and after the use of digital price labels. This consistency suggests that retailers are not using the technology to suddenly raise prices during peak shopping hours or holidays [1].
Minimal Price Changes and Business Objectives
The study also revealed that the temporary price increase for products in a given store was nearly negligible before and after the use of digital price labels, with a difference of 0.0056% after their implementation. This slight change can be attributed to factors such as wholesale cost changes, competitor pricing, and manufacturer promotions, rather than dynamic, localized price spikes based on real-time conditions [1].
Grocery stores profit from customers purchasing a wide variety of products over an extended period of time rather than from getting them to buy a few hot commodities at a specific point in time. The stores' true objective, in order to be profitable, is to grab consumers and hold onto them for as long as they can [3].
Public Statements by Major Grocery Retailers
Major U.S. grocery chains such as Kroger, Walmart, Whole Foods, and Lidl US have publicly stated they do not intend to use ESLs for intraday surge pricing, focusing instead on pricing accuracy, operational efficiency, and waste reduction [3][5]. Experts also note that sudden price increases during shopping hours would risk alienating customers and damaging thin-margin grocery business models, which rely heavily on customer loyalty [1].
Historical Perspective on Price Stability
Keeping prices relatively stable has been a sound business decision for grocery stores, as shown by their behavior over the past hundred years. The trend of price surging was basically nonexistent before electronic shelf labels, and it stayed nonexistent with the labels [2].
Conclusion
In summary, the combination of rigorous empirical research and public statements from leading grocery retailers indicates strong evidence that U.S. grocery retailers are not using ESLs to implement surge pricing [1][2][3][5]. Shoppers can at least find comfort in the finding that digital price labels are unlikely to drive up prices at their favorite grocery store any time soon.
The industry used data-and-cloud-computing to analyze over 180 million product-level price observations in retail, showing no meaningful increase in short-lived price hikes, indicating that surge pricing in business isn't a concern for shoppers using digital price labels [1][2]. Finance experts suggest that the near-negligible price changes retailers experience post-ESL implementation are influenced by factors like wholesale cost changes, competitor pricing, and manufacturer promotions [1]. In the realm of technology, it's worth noting that major grocery retailers have publicly stated their intention to focus on pricing accuracy, operational efficiency, and waste reduction, rather than using ESLs for intraday surge pricing [3][5].
