The rapid pace of technology and the digital age we are living through continues to reshape retail and the way consumers shop. And for Walmart customers, the next major shift is already making its way into stores.
Frequent Walmart shoppers could soon notice a significant change when it comes to pricing on their favorite products. Last week, Walmart announced plans to roll out digital shelf labels (DSLs) with the expectation that the technology will be installed in all U.S. stores by the end of the year. The move would replace the traditional paper price tags customers are accustomed to seeing on store shelves.
DSLs allows store employees to update prices across multiple products at once, rather than having to move from item to item manually changing each tag. Time savings appear to be one of the primary drivers behind the shift. One Walmart team leader told CNBC that the system reduced the time she previously spent on pricing duties by roughly 75 percent, freeing her up to focus more on assisting customers. She added that the technology also offers a practical benefit for operations. For example, Walmart’s Spark delivery drivers searching for specific items can see a flashing digital shelf label, making it easier to quickly locate products on crowded store shelves.
Customers have a right to be skeptical of this new initiative, and even some national lawmakers have voiced skepticism, and in certain cases outright opposition. At the center of the concern is the possibility of so-called “surge pricing,” also known as “dynamic pricing,” in which companies automatically raise prices for goods or services when demand is high and supply is limited. With digital pricing systems, those adjustments can now be made almost instantly, with the push of a button. For example, a price could change at 9 a.m., shift again around lunchtime, and then be adjusted once more before the 5/5:30pm after work rush. Because the process is fully automated, there is little to no incremental cost associated with changing prices.
Dynamic pricing is not a new concept. Airlines, sports teams, entertainment venues, and rideshare platforms have used similar models for years. A familiar example for many consumers is the increase in Uber fares during peak travel times, such as rush hour.
“With food costs rising each month, it’s more important than ever that any new technologies implemented in grocery stores are helping to lower costs, not raise them,” said Senator Ben Ray Luján of New Mexico. “That is why I’ve introduced the Stop Price Gouging in Grocery Stores Act, legislation that is intended as a preventative measure to put common-sense guardrails in place at large retail stores and protect consumers.”
Congresswoman Val Hoyle of Oregon is sponsoring legislation in the U.S. House of Representatives on Capitol Hill that would ban the use of DSLs. “There needs to be laws and enforcement to protect consumers — and until then, I’d like to see them banned outright,” she said. “Without proper regulations, it is not so hard to see corporations using loopholes to raise prices on consumers. The idea exists. It is only a matter of time before a billionaire in a boardroom implements the idea.”
Walmart, for its part, has been engaging with lawmakers in an effort to address concerns, while emphasizing that the rollout of DSLs is intended solely to improve efficiency and customer service. Company officials have affirmed that the technology is not designed to create different prices for different shoppers, noting that the labels “are just a modern tool to help our associates do their jobs better, but the price you see is the same for everyone in any given store.”
Pennsylvania, in its own right, is also taking action on the issue, becoming one of the latest states to introduce legislation aimed at outlawing the practice of dynamic pricing.
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