Elizabeth Warren has one of the largest supermarket chains in the US in her sights because of possible price gouging.
In a recent letter, Massachusetts Representative Bob Casey and fellow Pennsylvania Senator Bob Casey charged that Kroger’s move to electronic shelf labels (ESLs) could allow the company and other chains to dynamically price groceries, causing shortages of essential goods by pricing them “like airline tickets.”
“The widespread adoption of digital price tags will apparently allow large grocery stores to bully consumers to increase their profits,” said the letter, sent to Kroger CEO Rodney McMullen last week. “Americans still struggle to make a living because giant corporations, facing little competition, can force customers to overpay for essential groceries while simultaneously increasing their profits.”
Kroger, which operates nearly 3,000 stores in the U.S., began rolling out ESLs in its stores in 2018. The new technology, called “Kroger Edge,” gave the company the ability to instantly change prices in dozens of stores. When Edge was first announced, it was promoted as a way to make shopping more convenient for consumers. The labels would include video ads and coupons and allow shoppers to easily search for specific brands on their smartphones and even look for products tailored to dietary restrictions.
But the technology also raised concerns about what’s known as “surge pricing.” Just as Uber prices skyrocket during rush hour, grocery stores could raise the price of ice cream on hot days or hot chocolate during a snowstorm. Instead of having a single fixed price that everyone can understand and compare, groceries would fluctuate not only by circumstance but potentially by shopper, allowing the store to “find ways to squeeze the maximum profit out of each customer,” the senators wrote.
Over the past decade, more companies have moved away from fixed pricing and now display individual prices to their customers. Uber has been accused not only of raising overall prices when demand is higher, but also of charging its riders more when their phone’s battery is low. Staples has shown online shoppers different prices for identical products depending on their location, while travel website Orbitz showed higher prices to users with Mac computers, the Wall Street Journal reported. These largely legal practices allow AI to “pick your pockets,” one surveillance opponent wrote last month, shortly before the Federal Trade Commission announced a sweeping investigation into differential pricing.
Kroger said in a statement to Assetssaid it was never intended to use the company’s digital labels to raise prices for consumers.
“Kroger’s business model is to lower prices over time so that more customers shop with us, which leads to more revenue, which we then invest in lower prices,” the company said. “Any test of electronic shelf labels is aimed at lowering prices for customers where it matters most. To say otherwise is not true.”
Kroger announced that it would expand its ESL operations in 2023, rolling out the technology to 500 stores across the U.S. In 2024, the company partnered with Intelligence Node, a retail analytics company that uses AI to deliver dynamic pricing.
In a press release announcing the partnership, Intelligence Node made no mention of dynamic pricing, saying only that it would help Kroger “improve online shopping by providing an experience that better informs customers’ product selection and purchasing decisions.”
Other grocers have followed Kroger’s lead. In June, Walmart, the largest supermarket chain in the US, announced it would introduce ESLs in 2,300 stores by 2026. Whole Foods and Amazon Fresh have also begun the transition.
At the end of the letter, the senators provided a list of questions for Kroger to answer by August 20. These included the average price change for goods subject to dynamic pricing and whether Kroger changes the prices of goods more than once a day.
“It is outrageous that grocery giants like Kroger continue to implement price spikes and other profiteering schemes while families continue to struggle to afford food,” they wrote.
