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Elizabeth Warren is targeting one of the biggest supermarket chains in the U.S. over potential price-gouging.\u00a0<\/p>\n
In a recent letter<\/a>, the Massachusetts lawmaker and fellow Senator Bob Casey of Pennsylvania charged that Kroger\u2019s transition to electronic shelving labels (ESLs) could allow it and other chains to dynamically price groceries, creating scarcity around essential goods by pricing them \u201clike airline tickets.\u201d<\/p>\n \u201cWidespread adoption of digital price tags appears poised to enable large grocery stores to squeeze consumers to increase profits,\u201d reads the letter, sent to Kroger<\/a> CEO Rodney McMullen last week. \u201cEveryday Americans still struggle to put food on the table because giant corporations, facing little competition, can force customers to pay too much for essential grocery items while they further increase their profits.\u201d<\/p>\n Kroger, which operates close to 3,000 stores across the U.S., began implementing ESLs in stores back in 2018<\/a>. The new technology, called \u201cKroger Edge,\u201d gave the company the power to instantly change prices across dozens of stores. When Edge was first announced, it was promoted as a way to make shopping more friendly to consumers. The labels would include video ads and coupons, and allow shoppers to\u00a0 easily look for specific brands on their smartphone, and even browse for products based on dietary restrictions.\u00a0<\/p>\n But the tech also raised concerns about so-called \u201csurge pricing.\u201d Like Uber<\/a> prices that spike during rush hour, grocers would be able to increase the price of ice cream on a hot day, or hot chocolate during a snowstorm. Food items, rather than having a single set price that everyone can understand and compare, would fluctuate based not just on circumstances but potentially based on the shopper, allowing the store \u201cto \u2026figure out ways to extract the maximum amount of profit from each customer,\u201d the senators wrote.\u00a0<\/p>\n For the past decade, more companies have shifted away from set pricing to showing individualized prices for customers. Uber, on top of raising overall prices when demand is higher, has been accused of charging more to riders when their phone battery is low<\/a>. Staples<\/a> showed online shoppers different prices for identical products based on their location<\/a>, while travel site Orbitz showed higher prices to users on Mac computers, the Wall Street Journal reported<\/a>. These largely legal practices allow AI to \u201cto pick your pocket,\u201d one anti-surveillance activist wrote last month<\/a>, just before the Federal Trade Commission announced a major investigation into differential pricing<\/a>.<\/p>\n Kroger, in a statement to Fortune<\/em>, said that the company\u2019s digital labels have never been intended to be used to increase prices for consumers.\u00a0<\/p>\n \u201cKroger\u2019s 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,\u201d the company said. \u201cAny test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true.\u201d<\/p>\n Kroger announced it was expanding its ESL operations in 2023<\/a>, bringing the tech into 500 stores across the U.S. In 2024, the company partnered with Intelligence Node, a retail analytics firm that uses AI to provide dynamic pricing.\u00a0<\/p>\n In a press release announcing the partnership, Intelligence Node made no mention of dynamic pricing, saying only that it would help Kroger \u201cenhance online shopping by delivering an experience that better informs shoppers\u2019 product selections and purchase decisions.<\/a>\u201d<\/p>\n Other grocery store operators have followed in Kroger\u2019s footsteps. In June, Walmart<\/a>, the biggest supermarket chain in the U.S., announced it would implement ESLs in 2,300 stores by 2026<\/a>. Whole Foods and Amazon<\/a> Fresh have begun making the transition as well.<\/p>\n The senators concluded the letter with a list of questions for Kroger to provide by Aug. 20, including what the average change in price was for goods subjected to dynamic pricing, and whether Kroger ever changes the prices of goods more than one time in a single day.\u00a0<\/p>\n \u201cIt is outrageous that, as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out surge pricing and other corporate profiteering schemes,\u201d they wrote.<\/p>\n<\/div>\n