Grocery chains rolling out new system that could let them change prices 'every 10 seconds'

19 June 2024

If a new digital label system for grocery items becomes standard, the days of coupon-cutting and estimating prices of items in your cart may be a thing of the past.

According to a Wednesday report in NPR, Walmart is now rolling out a new digital labeling system that could let stores change prices "as often as every ten seconds." Grocery industry analyst Phil Lempert said the new digital labels would lead to rapidly fluctuating prices that could be a double-edged sword for customers.

"If it’s hot outside, we can raise the price of water and ice cream. If there's something that’s close to the expiration date, we can lower the price — that’s the good news," Lempert said.

Walmart has already started to introduce the new digital labels in some of its stores in Texas, with the goal of having them in 2,300 stores by 2026. The company said the new system allowed for quicker restocking of shelves, along with both "increased productivity and reduced walking time."

This model is similar to the "surge pricing" system that ride-sharing app Uber is known for, in which those looking to arrange transportation during peak hours can be charged more than for a typical ride. Fast food chain Wendy's faced a wave of backlash earlier this year after its CEO suggested a "dynamic pricing" model that would allow stores to use digital boards above registers that allow them to easily change prices on a whim.

Wendy's President and CEO Kirk Tanner said he hoped to earmark $20 million in order to "roll out digital menu boards to all U.S. company-operated restaurants by the end of 2025 and approximately $10 million over the next two years to support digital menu board enhancements for the global system."

However, after social media's intense reaction to the proposal, the company clarified that “Wendy’s will not implement surge pricing, which is the practice of raising prices when demand is highest."

"We didn’t use that phrase, nor do we plan to implement that practice,” a Wendy's spokesperson told NBC News. The spokesperson emphasized that there are currently “no plans” to raise prices during busy times.

Santiago Gallino, who is a retail management professor at the Wharton School of Business at the University of Pennsylvania, told NPR that he doubts grocery stores would risk angering their customer base by increasing prices with little to no notice.

“To be honest, I don’t think that’s the underlying main driver of this,” Gallino said. “These are companies that tend to have a long-term relationship with their customers and I think the risk of frustrating them could be too risky, so I would be surprised if they try to do that.”

Click here to read NPR's report in its entirety.

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