Digital price tags: innovation or price gouging tool?
Sens. Elizabeth Warren and Bob Casey have objected to Kroger’s new pricing technology, concerned that it could allow for skyrocketing prices.
News told by money
As electronic shelf labels spread to grocery stores across the country, consumers have expressed concerns about in-store price fluctuations, a concern that has already attracted the attention of regulators.
Digital price tags are not new, but they are becoming increasingly common. Retailers say they are investing in technology to increase efficiency and eliminate waste, not to test dynamic pricing models that change in real time based on demand.
Research shows that’s true so far. Still, electronic shelf labels give retailers the option to instantly change prices based on demand. Using this feature, lawmakers in several states are pushing for regulations before they are actually used.
Amanda Oren, vice president of grocery industry strategy at RELEX, said digital price tags allow retailers to keep prices consistent online and in-store, while also allowing them to immediately lower prices on clearance and sale items without having to wait for regular updates. However, she acknowledged consumer concerns about dynamic pricing.
“An example I’ve heard several times is that you can increase the price of umbrellas when it’s raining. In the past, without electronic shelf labels and dynamic pricing, it was very complicated to adjust, but now it’s as simple as flipping a switch,” Oren said. “We don’t think that’s an issue because it’s a very bad customer experience.”
What is a digital price tag and where can I find it?
Electronic shelf labels (ESLs) are digital price tags that allow retailers to automatically update product prices. Walmart said the technology can reduce the time it takes for employees to change prices from two days to just minutes.
The nation’s largest retailer has pledged to replace paper shelf labels with digital labels in 2,300 U.S. stores by the end of the year, following a pilot in a Texas store.
Customers may also encounter digital price tags at Kroger and Whole Foods, which are gradually integrating the technology. Albertsons is piloting the technology at several stores in Idaho.
The technology is more common in Europe, and Oren said it has been well received by both customers and retailers.
“People should be ready to see the positive side as well,” she says. “Based on history, that shouldn’t be a problem.”
Lawmakers working on regulating ESL
In an open letter to Kroger last year, Rep. Rashida Tlaib warned that electronic shelf labels could make it easier to gouge consumers in emergencies and, when combined with facial recognition, could allow companies to profile customers and adjust prices.
The letter echoes earlier concerns from Sens. Elizabeth Warren and Bob Casey, who warned in a letter to Kroger that “with the widespread adoption of digital price tags, big grocers appear poised to increase profits by squeezing consumers.”
“To be clear, Kroger does not and has never engaged in ‘surge pricing,'” the company previously told USA TODAY. “The electronic shelf label test is designed to lower prices for more customers when it matters most. It is untrue to suggest otherwise.”
Digital price tags have not yet led to higher prices
Responding to concerns from policymakers, researchers from Northwestern University, the University of California, San Diego, and the University of Texas at Austin tracked transaction data from an anonymous U.S. grocery retailer that had phased in ESL in more than 100 stores and found “virtually no surge pricing” before and after ESL implementation, according to a paper written by the researchers.
“Our results suggest that recent regulatory concerns about surge prices in grocery retail are misplaced,” the paper said.
“There’s a lot of people panicking unnecessarily,” Oren said, but added that regulators are monitoring the issue closely and should act quickly if problems arise.
What’s next?
In 2025, legislators in 24 states introduced 51 bills seeking to regulate algorithmic pricing, including dynamic pricing and monitoring-based pricing, according to data from the Consumer Reports project.
Earlier this year, the National Retail Federation asked a federal court to block a New York state law requiring transparency in personalized algorithmic pricing, saying in a July statement that “this action unfairly denigrates the system that helps retailers provide lower prices and personalized offers to their customers.” This legal challenge is still being fought in court.
In August, Tlaib introduced the Stop Price Gouging Act in Grocery Stores. The bill has been referred to the House Energy and Commerce Committee and the Department of Justice for review or amendments before proceeding to a full vote in the House of Representatives, then in the Senate. If approved by both chambers, the president could sign the bill into law.
Contact Rachel Barber rbarber@usatoday.com X Follow her at @rachelbarber_
