Kroger to close some automated facilities
Grocery chain Kroger announced it will close some of its automated facilities as part of its strategy to improve the customer experience.
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- Kroger has installed electronic shelf labels in many of its stores.
- Critics and some politicians have raised concerns that digital tags could be used for “surge prices.”
- Kroger says it does not engage in surge pricing and that the labels help reduce costs and improve price accuracy.
Kroger is installing cutting-edge price tag technology in several stores last month, the grocer told the Cincinnati Enquirer, part of the USA TODAY network.
Electronic Shelf Labels (ESL) allow grocery stores to change the prices of items in the store via computer without requiring store staff to change pasted labels. Kroger says these stores are in nearly a quarter of its stores nationwide.
The Cincinnati-based supermarket giant said the move will save countless hours and allow employees to serve more customers.
Critics of the technology worry it could open the door to predatory pricing practices, such as increasing prices during busy periods, known as “surge pricing.”
Kroger defends technology, provides new details
Last fall, Kroger quietly began rolling out the label at about a dozen local stores, mostly in the local suburbs. Company officials have generally defended its use but have previously declined to answer questions about when and where the technology will be introduced.
Kroger officials said in a statement that all but one of the company’s 104 stores in the Cincinnati, Northern Kentucky and Dayton areas have implemented the labeling technology. It has been deployed in “nearly all” of 21 retail departments across the country, and “rollout continues.”
The company did not say how far along the rollout in other divisions is or when it will be completed. Kroger divisions span the country from California to Georgia and Michigan to Texas. The retailer operates stores under the Kroger banner, as well as stores such as Fred Meyer, Ralphs, Harris Teeter, Pick ‘n Save, Dillons, King Soopers, Mariano’s, Fry’s and QFC.
Kroger said North Carolina-based Harris Teeter, Indiana-based Ruler Foods and its Midwest Food for Less stores are the only ones not yet labeled. All other departments are at least starting to use them.
The smaller the device, the bigger the controversy.
Kroger shoppers may not even notice the change. Tags are not much different from the old stick-on labels. But if shoppers look closely, they’ll notice that the tags are all housed in a white plastic case as thick as a book of matches.
Pricing technology and concerns that it could be used to gouge customers has come under intense scrutiny over the past decade, which has seen historic inflation not seen since the early 1980s. Prices in the U.S. have risen nearly 29% since March 2020 due to the outbreak of the COVID-19 pandemic, the invasion of Ukraine and this year’s war with Iran, according to the U.S. Bureau of Labor Statistics. But inflation has worsened in supermarkets, with prices rising 31% over the same period.
In 2024, U.S. Sen. Elizabeth Warren (D-Mass.) demanded that Kroger provide more information about how it would use the technology.
Kroger said in its response letter that ESL is used to lower costs, not to raise prices.
“Kroger did not and still does not engage in ‘surge pricing.’ Kroger’s business model is built on lowering prices to attract more customers,” wrote Paula Kash, the retailer’s vice president of group operations. “Using this innovative technology frees up our associates’ time so they can prioritize serving customers in our stores.”
Kroger officials noted that the company’s new CEO, Greg Foran, has made it clear that he wants to cut prices, not raise them, to accelerate sales growth. In a recent interview with Bloomberg, Foran outlined plans to cut prices on “thousands of products.”
“Our use of electronic shelf labels is focused on providing accurate pricing and meaningful savings to our customers,” Kroger said in a statement to the Enquirer, noting, for example, that the labels make it easier for stores to reduce prices on items nearing their sell-by dates.
Walmart also adopts digital price tags
Kroger isn’t the only company using this technology.
Earlier this year, Arkansas-based supercenter giant Wal-Mart announced that it had installed electronic shelf labels in 2,300 stores, or half of its retail operations in the United States, and that the remaining stores would have electronic shelf labels within a year.
Kroger operates approximately 2,700 stores in 35 states and the District of Columbia. The company employs 403,000 people.
