Major Grocery Chain With 120 Michigan Stores Under Pricing Scrutiny

You may have noticed that Kroger has begun using electronic shelf tags in some locations. They're certainly fancy - but there's concern that these high-tech price tags may lead to a controversial practice known as 'dynamic pricing.'

Kroger in Michigan

Kroger is the largest supermarket chain in the United States with about 1,320 locations. In Michigan, Kroger operates about 120 stores in 82 cities, according to its website.

Although a proposed merger with Albertsons has hit many roadblocks, that takeover would give Kroger an even larger US footprint. Albertsons does not currently have any locations in Michigan.

What is Dynamic Pricing?

Dynamic pricing is a technique used by industries such as airlines, hotels, Uber, and others. Those companies routinely raise or lower the price of their product or service based on demand. When demand is high, prices go up in order to maximize profits.

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But dynamic pricing or 'surge pricing' is considered controversial when it comes to selling groceries because food is an essential product.

According to the US Sun, Kroger began using electronic shelf labels in a few dozen stores in 2018 and has expanded the practice to over 500 stores in the last few years. Kroger says the use of these devices saves employees time because price adjustments and sale prices can be implemented quickly.

 Is Kroger Employing 'Surge Price' Tactics?

Senators Elizabeth Warren and Bob Casey recently sent a letter to Kroger CEO Rodney McMullen expressing concerns that the use of digital shelf tags could lead to price gouging during peak shopping times.

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According to the Cincinnati Enquirer, Kroger officials say they are incorporating the technology into their strategy to lower prices in order to attract more customers. They did not elaborate as to how frequently prices are changed.

"Kroger’s business model is to lower prices over time so that more customers shop with us," Kroger spokeswoman Erin Rolfes told The Enquirer. "Any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true."