Senators investigate surge pricing at Kroger
Senators Elizabeth Warren and Robert Casey announced an investigation into Kroger’s potential use of dynamic pricing for grocery goods, via the use of electronic shelving labels.
The lawmakers claim that at a time when grocery prices have become one of the most visible signs of lingering inflation, the grocer could use the dynamic shelf labels to engage in "surge pricing," to hike prices under peak demand to increase profits.
In a letter to Rodney McMullen, Kroger's CEO, the lawmakers wrote: "I am concerned about whether Kroger and Microsoft are adequately protecting consumers’ data, and that as Kroger expands the personalized customer experience, customers will ultimately be offered a worse deal."
The letter also highlights concerns about the company's shopper data-collection practices, citing the potential to use personalized profiles of shoppers to show dynamic prices "displaying the customer’s maximum willingness to pay on the digital price tag."
Kroger is the largest supermarket chain in the US, operating nearly 2,800 stores under two dozen or so brands and pulling in $150 billion in sales in 2023.
The 141-year-old grocer is a leader in monetizing decades of detailed shopper data through its loyalty program, which is used for 97% of transactions in its stores. The company has a data sciences division called 84.51, which sells insights to consumer packaged goods brands and allows advertisers to precisely target customers based on their shopping habits and demographic data.
Kroger spokesperson Erin Rolfes said in a statement to Sherwood News, “Kroger’s business model is to lower prices over time so that more customers shop with us, which leads to more revenue that we then invest in lower prices, higher wages, and an even better shopping experience. 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.”
Updated at 5pm ET with comment from Kroger.
In a letter to Rodney McMullen, Kroger's CEO, the lawmakers wrote: "I am concerned about whether Kroger and Microsoft are adequately protecting consumers’ data, and that as Kroger expands the personalized customer experience, customers will ultimately be offered a worse deal."
The letter also highlights concerns about the company's shopper data-collection practices, citing the potential to use personalized profiles of shoppers to show dynamic prices "displaying the customer’s maximum willingness to pay on the digital price tag."
Kroger is the largest supermarket chain in the US, operating nearly 2,800 stores under two dozen or so brands and pulling in $150 billion in sales in 2023.
The 141-year-old grocer is a leader in monetizing decades of detailed shopper data through its loyalty program, which is used for 97% of transactions in its stores. The company has a data sciences division called 84.51, which sells insights to consumer packaged goods brands and allows advertisers to precisely target customers based on their shopping habits and demographic data.
Kroger spokesperson Erin Rolfes said in a statement to Sherwood News, “Kroger’s business model is to lower prices over time so that more customers shop with us, which leads to more revenue that we then invest in lower prices, higher wages, and an even better shopping experience. 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.”
Updated at 5pm ET with comment from Kroger.
