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America's biggest grocery chain investigated over Uber-style surge pricing
Kroger, America's biggest supermarket chain, is being investigated over its use of electronic price labels on store shelves nationwide.
US Senators Elizabeth Warren and Bob Casey announced they were looking into the practice to see if the chain was engaging in surge pricing.
So-called 'dynamic pricing' is common in other industries, such as flights, hotels and car-sharing services like Uber. It sees customers paying more or less depending on demand.
But it can be controversial especially around essential items like groceries - and raises concerns that companies may start forcing customers to pay more at busy times.
Kroger is not the only big name to use it. Walmart - the biggest retailer overall in the US - announced in June it was planning to introduce digital shelf labels in thousands of stores. It is not clear if they will also be probed.
In a letter to Kroger's CEO Rodney McMullen, the senators expressed worries that the technology could be used to gouge customers and hike grocery prices during peak shopping times.
Kroger is being investigated over its use of electronic price labels on store shelves nationwide
Kroger began testing the technology - which it calls 'electronic shelving labels' - in 2018 and has since expanded it to 500 stores across the US.
The lawmakers requested information from the chain on how it uses the tech and its justification, the Cincinnati Enquirer reported.
'These digital price tags may enable Kroger and other grocery chains to transition to 'dynamic pricing,' in which the price of basic household goods could surge based on the time of day, the weather, or other transitory events – allowing stores to calibrate price increases to extract maximum profits at a time when the amount of Americans' income spent on food is at a 30-year high,' the letter read.
'Widespread adoption of digital price tags appears poised to enable large grocery stores to squeeze consumers to increase profits,' it continued.
The lawmakers noted how analysts have indicated how the widespread use of dynamic pricing could result in groceries and other consumer goods becoming 'priced like airline tickets'.
They said this would create a sense of urgency and scarcity which could allow sellers to 'extract the maximum amount of profit from each customer.'
Kroger, which operates 2,750 stores in 35 states, said that their strategy is to lower prices to attract customers.
A spokesperson told the Cincinnati Enquirer: 'Kroger's business model is to lower prices over time so that more customers shop with us. Everything we do is designed to support this strategy, and customers are shopping more with Kroger now than ever because we are fighting inflation and providing great value.
'Any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true.'
However the company did not address specific questions about the use of the tech and how frequently it changes prices, the outlet said.
Kroger is the largest supermarket operator in the United States, boasting over 400,000 employees and nearly 3,000 stores across the country,' the letter from the senators added.
'It is outrageous that, as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out surge pricing and other corporate profiteering schemes.'
They demanded that Kroger answer their questions by August 20.
Meanwhile, Walmart said the new technology would give customers 'an even better shopping experience' as it began testing it this year.
It also said it saved employees making weekly updates to shelf labels, which typically took a store worker about two days.
US Senators Elizabeth Warren and Bob Casey are investigating if Kroger is engaging in surge pricing
Kroger began testing the tech in 2018 and has since expanded it to 500 stores across the US
Walmart said it hopes that using digital shelves will streamline updating prices
Kroger came under fire for stealing promotional photos from a family-owned peach business
One retail expert told DailyMail.com that Walmart, at least, was very unlikely to roll out surge-style pricing.
Retail expert Neil Saunders, from analysts Global Data, told DailyMail.com: 'Walmart won’t move to dynamic pricing by changing loads of prices depending on what time of day you shop.
'That goes against the company's philosophy of providing everyday low prices and it would annoy their consumers.'
Wendy's faced backlash earlier this year after DailyMail.com revealed the fast food giant had plans to introduce an 'Uber surge-style menu' with different prices depending on the time of the day.
The company then quickly U-turned on its plans, insisting that it never intended to raise prices when demand was high - only to lower them at 'slower times of the day'.
Meanwhile, Kroger came under fire in June for stealing promotional photos from a family-owned peach business.
The Peach Truck, which has been operating in Georgia for 12 years, discovered that not only had Kroger announced its own service to sell the fruit from brightly colored trucks but that it had also used images from his company's Instagram.