Shoppers are wary of digital shelf labels, but a study found they don't
lead to price surges
[June 09, 2025] By
DEE-ANN DURBIN
Digital price labels, which are rapidly replacing paper shelf tags at
U.S. supermarkets, haven’t led to demand-based pricing surges, according
to a new study that examined five years' worth of prices at one grocery
chain.
But some shoppers, consumer advocates and lawmakers remain skeptical
about the tiny electronic screens, which let stores change prices
instantly from a central computer instead of having workers swap out
paper labels by hand.
“It’s corporations vs. the humans, and that chasm between us goes
further and further,” said Dan Gallant, who works in sports media in
Edmonton, Canada. Gallant's local Loblaws supermarket recently switched
to digital labels.
Social media is filled with warnings that grocers will use the
technology to charge more for ice cream if it’s hot outside, hike the
price of umbrellas if it’s raining or to gather information about
customers.
Democratic U.S. Sens. Elizabeth Warren of Massachusetts and Bob Casey of
Pennsylvania fired off a letter to Kroger last fall demanding to know
whether it would use its electronic labels as part of a dynamic pricing
strategy.
Lawmakers in Rhode Island and Maine have introduced bills to limit the
use of digital labels. In Arizona, Democratic state Rep. Cesar Aguilar
recently introduced a bill that would ban them altogether.
The bill hasn’t gotten a hearing, but Aguilar said he’s determined to
start a conversation about digital labels and how stores could abuse
them.
“Grocery stores study when people go shopping the most. And so you might
be able to see a price go down one day and then go up another day,”
Aguilar told The Associated Press.
Researchers say those fears are misplaced. A study published in late May
found “virtually no surge pricing” before or after electronic shelf
labels were adopted. The study was authored by Ioannis Stamatopoulos of
the University of Texas, Austin, Robert Evan Sanders of the University
of California, San Diego and Robert Bray of Northwestern University
The researchers looked at prices between 2019 and 2024 at an unnamed
grocery chain than began using digital labels in October 2022. They
found that temporary price increases affected 0.005% of products on any
given day before electronic shelf labels were introduced, a share that
increased by only 0.0006 percentage points after digital labels were
installed.
The study also determined that discounts were slightly more common after
digital labels were introduced.
Economists have long wondered why grocery prices don’t change more
often, according to Stamatopoulos. If bananas are about to expire, for
example, it makes sense to lower the price on them. He said the cost of
having workers change prices by hand could be one issue.
But there’s another reason: Shoppers watch grocery prices closely, and
stores don’t want to risk angering them.
“Selling groceries is not selling a couch. It’s not a one-time
transaction and you will never see them again,” Stamatopoulos said. “You
want them coming to the store every week.”
Electronic price labels aren’t new. They’ve been in use for more than a
decade at groceries in Europe and some U.S. retailers, like Kohl's.
But they’ve been slow to migrate to U.S. grocery stores. Only around 5%
to 10% of U.S. supermarkets now have electronic labels, compared to 80%
in Europe, said Amanda Oren, vice president of industry strategy for
North American grocery at Relex Solutions, a technology company that
helps retailers forecast demand.
[to top of second column] |
Electronic grocery labels are displayed at a Kroger grocery store,
in Monroe, Ohio, Nov. 13, 2024. (AP Photo/Jeff Dean)
 Oren said cost is one issue that has
slowed the U.S. rollout. The tiny screens cost between $5 and $20,
Oren said, but every product a store sells needs one, and the
average supermarket has 100,000 or more individual products.
Still, the U.S. industry is charging ahead. Walmart, the nation's
largest grocer and retailer, hopes to have digital price labels at
2,300 U.S. stores by 2026. Kroger is expanding the use of digital
labels this year after testing them at 20 stores. Whole Foods is
testing the labels in nearly 50 stores.
Companies say electronic price labels have tremendous advantages.
Walmart says it used to take employees two days to change paper
price labels on the 120,000 items it has in a typical store. With
digital tags, it takes a few minutes.
The labels can also be useful. Some have codes shoppers can scan to
see recipes or nutrition information. Instacart has a system in
thousands of U.S. stores, including Aldi and Schnucks, that flashes
a light on the digital tag when Instacart shoppers are nearby to
help them find products.
Ahold Delhaize’s Albert Heijn supermarket chain in the Netherlands
and Belgium has been testing an artificial intelligence-enabled tool
since 2022 that marks down prices on its digital labels every 15
minutes for products nearing expiration. The system has reduced more
than 250 tons of food waste annually, the company said.
But Warren and Casey are skeptical. In their letter to Kroger, the
U.S. senators noted a partnership with Microsoft that planned to put
cameras in grocery aisles and offer personalized deals to shoppers
depending on their gender and age.
In its response, Kroger said the prices shown on its digital labels
were not connected to any sort of facial recognition technology. It
also denied surging prices during periods of peak demand.
“Kroger’s business model is built on a foundation of lowering prices
to attract more customers,” the company said.
Aguilar, the Arizona lawmaker, said he also opposes the transition
to digital labels because he thinks they will cost jobs. His
constituents have pointed out that grocery prices keep rising even
though there are fewer workers in checkout lanes, he said.
“They are supposed to be part of our community, and that means
hiring people from our community that fill those jobs," Aguilar
said.
But Relex Solutions' Oren said she doesn't think cutting labor costs
is the main reason stores deploy digital price tags.
“It’s about working smarter, not harder, and being able to use that
labor in better ways across the store rather than these very
mundane, repetitive tasks,” she said.
___
AP Writers Anne D'Innocenzio in New York and Sejal Govindarao in
Phoenix contributed.
All contents © copyright 2025 Associated Press. All rights reserved |
