Casey and Warren Sound the Alarm on Krogers Digital Price Tags

Massachusetts Senator Elizabeth Warren and Pennsylvania Senator Bob Casey warned in a letter that Kroger and other grocery chains may very well be using electronic shelf label (ESL) technology to artificially raise consumer prices through a dynamic pricing model.

According to , despite the fact that Kroger began using ESL in 2018, the senators I sent a letter to the CEO of Kroger Rodney McMullen August 5. In the letter: the couple warned: “The widespread adoption of digital price tags seems poised to allow big grocery stores to squeeze consumers to increase profits. Analysts have pointed out that the widespread use of dynamic pricing will cause groceries and other consumer goods to be ‘priced like airline tickets,’ ‘creating a sense of urgency and scarcity that wouldn’t exist if there were simply publicly posted prices that everyone could understand,’ and enabling ‘retailers… to figure out ways to squeeze the most profit out of every customer.’”

The grocer called the technology “Kroger Edge” and initially pitched it as a solution to improve customers’ in-store shopping experiences. The technology includes video ads, digital coupons, and a search function through the company’s mobile app.

However, it has also raised concerns about dynamic pricing, which the senators’ letter alludes to. Dynamic pricing refers to the ability of an organization delivering goods or services, corresponding to Uber, to boost prices at certain times of the day based on usage volume or other metrics. Similarly, the technology could artificially manipulate prices based on several aspects, including customers themselves.

Kroger, meanwhile, disputed this interpretation of its technology in an announcement to .

“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 reinvest in lower prices,” the company said. “Any test of electronic shelf labels is designed to further lower prices for the customers who matter most. To suggest otherwise is false.”

The statement continued: “Kroger and the company it has partnered with to expand the ‘Kroger Edge’ technology in 2024, Intelligence Node, have been careful to avoid any mention of dynamic pricing, saying only in a press release that Intelligence Node will help Kroger by using its expertise to ‘enhance the online shopping experience by providing customers with an experience that better informs product selection and purchasing decisions.’”

Kroger isn’t the only grocer trying to leverage the sort of technology. According to , Walmart, Amazon Fresh, and Whole Foods, that are all owned by Amazon, are all trying to implement ESL technology of their stores.

The senators in the letter also raised concerns about the potential use of facial recognition software and the collection of sensitive personal information.

“In addition to inflating prices, EDGE Shelf helps Kroger collect and exploit sensitive consumer data. Through a partnership with Microsoft, Kroger plans to place cameras on its digital displays that will use facial recognition tools to determine the gender and age of a customer captured on camera and present them with personalized offers and ads on EDGE Shelf,” the letter stated.

The letter continued: “EDGE will allow Kroger to use customer data to create personalized profiles of each customer, and then use those profiles to ‘determine how much each of us can tolerate in price increases,’ quickly updating and displaying a customer’s maximum willingness to pay for a digital price tag—a corporate profit-making ability that would be impossible with a regular paper price tag. I worry about whether Kroger and Microsoft are adequately protecting consumer data, and as Kroger expands the personalized customer experience, customers will ultimately be getting a worse deal.”