Dee-Ann Durbin
Digital price labels, which rapidly replace paper shelves tags in US supermarkets, have not led to a surge in demand-based pricing, according to a new study that looked at five years’ worth of prices across a single grocery chain.
However, some shoppers, consumer advocates and lawmakers remain skeptical of the small electronic screen.
“We’ve been working with sports media in Edmonton, Canada,” said Dan Gallant. Gallant’s local Loblaws supermarket recently switched to digital labels.
Social media is filled with warnings that grocery stores will use technology to charge more ice cream if it’s hot outdoors, and will raise umbrella prices if it’s raining, or gather information about customers.
Massachusetts Democrat Sen. Elizabeth Warren and Pennsylvania Bob Casey fired a letter to Kroger last fall, demanding that they know if they would use electronic labels as part of their dynamic pricing strategy.
Lawmakers from Rhode Island and Maine have introduced legislation to limit the use of digital labels. In Arizona, Democratic state lawmaker Cesar Aguilar recently introduced a bill that would ban them entirely.
The bill has not received a hearing, but Aguilar said he is determined to launch a conversation about digital labels and how stores can abuse them.
“Grocery stores study when people go shopping the most, and you might one day be able to go up on another day,” Aguilar told The Associated Press.
Researchers say these fears are misguided. A study published in late May found that “effectively no surge pricing” before or after the adoption of electronic shelf labels. The study was written by Ioannis Stamatopoulos of the University of Texas, Austin, Robert Evan Sanders of the University of California, Robert Bray of San Diego and Northwestern University.
Researchers looked at prices between 2019 and 2024 at an unnamed grocery chain that began using digital labels in October 2022. They found that temporary price increases on certain days before the electronic shelf labels were introduced affect 0.005% products.
This study determined that discounts were slightly more common after the introduction of digital labels.
According to Stamatopoulos, economists have been wondering why grocery prices don’t change so often. For example, if a banana is about to expire, it makes sense to lower the price. He said the cost of changing prices by hand for workers could be one issue.
But there’s another reason. Shoppers look closely at grocery prices. The store doesn’t want to risk making them mad.
“Selling groceries doesn’t sell couches. It’s not a one-off deal and you’ll never see them again,” Stamatopoulos said. “You want them to come to the store every week.”
Electronic price labels are not new. They have been used for over a decade by European food and some US retailers like Coles.
However, they were slow to move to US grocery stores. Only about 5% to 10% of US supermarkets have electronic labels compared to 80% in Europe, said Amanda Oren, vice president of industrial strategy at Relex Solutions, a technology company that helps retailers predict demand.
Oren said costs were one issue that slowed down US deployment. A small screen costs between $5-20, but every product your store sells requires one, and the average supermarket has over 100,000 individual products.
Still, the US industry is charging first. Walmart, the country’s largest grocery and retailer, hopes to set digital price labels at 2,300 US stores by 2026. Kroger is expanding its use of digital labels this year after testing at 20 stores. Whole Foods tests labels in almost 50 stores.
Companies say electronic price labels have a huge advantage. Walmart says it will take two days for employees to change the paper price labels for the 120,000 items in a typical store. Using digital tags takes a few minutes.
The labels are also convenient. Some have codes that allow shoppers to scan and view recipes and nutritional information. Instacart has systems in thousands of US stores, including Aldi and Schnucks, and a system that sheds light on digital tags to help Instacart shoppers find products nearby.
Electronic grocery labels are on display at Kroger Grocers Store in Monroe, Ohio on November 13th, 2024 (AP Photo/Jeff Dean)
Electronic grocery labels are on display at Kroger Grocers Store in Monroe, Ohio on November 13th, 2024 (AP Photo/Jeff Dean)
Electronic grocery labels are on display at Kroger Grocers Store in Monroe, Ohio on November 13th, 2024 (AP Photo/Jeff Dean)
Electronic grocery labels are on display at Kroger Grocers Store in Monroe, Ohio on November 13th, 2024 (AP Photo/Jeff Dean)
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Electronic grocery labels are on display at Kroger Grocers Store in Monroe, Ohio on November 13th, 2024 (AP Photo/Jeff Dean)
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The Dutch and Belgian Albert Heijn supermarket chain from Ahold Delhaize has been testing artificial intelligence-enabled tools since 2022, lowering the price of digital labels every 15 minutes for products that are close to expiration dates. The system reduces more than 250 tonnes of food waste each year, the company said.
However, Warren and Casey are skeptical. In a letter to Kroger, the US Senator pointed to a partnership with Microsoft, which had planned to place cameras in the grocery aisle and provide personalised deals to shoppers based on gender and age.
In its response, Kroger said the prices shown on the digital labels are not related to any kind of facial recognition technology. They also refused to raise prices during peak demand periods.
“Kroger’s business model is built on a foundation that cuts prices to attract more customers,” the company said.
Arizona State Senator Aguilar said he is also opposed to the transition to digital labeling because he believes his job will be expensive. His members pointed out that despite the low number of workers in the checkout lane, grocery prices continue to rise, he said.
“They should be part of our community, and that means hiring people from our community that meet those jobs,” Aguilar said.
However, Oren of Relex Solutions said he doesn’t see labor costs as the main reason for deploying digital price tags.
“It’s not smarter, less stiffer, and it’s not these very common, repetitive tasks, but that you can use that workforce in a better way across the store,” she said.
New York AP writer Anne Dino Inozio and Phoenix’s Sejal Govindarao contributed.
Original issue: June 12, 2025, 4:06pm EDT
