Kroger draws serious scrutiny over digital price tags

Take a close look at the price tags on the shelves the next time you walk into a Kroger, because something has changed. Kroger confirmed that nearly one in four of its stores nationwide now use electronic shelf labels, the Cincinnati Enquirer reported.

The technology allows the company to change the price of any product in seconds through a centralized computer system rather than by hand.

Kroger says the switch will save countless hours of labor and free employees to spend more time helping shoppers in its stores.

But a growing number of federal and state lawmakers, including U.S. Sens. Elizabeth Warren (D-Mass.), Ben Ray Luján (D-N.M.), and Jeff Merkley (D-Ore.), along with New York Attorney General Letitia James, warn that the technology could open the door to predatory surge pricing on groceries. 

The expansion comes as grocery prices have climbed roughly 31% since March of 2020, according to the Bureau of Labor Statistics, outpacing overall consumer inflation over the same period.

Kroger finds itself at the center of a national debate over whether digital pricing technology serves consumers or creates new ways to exploit them.

Kroger’s electronic shelf label expansion spans nearly every retail division

Kroger began testing electronic shelf labels in 2018, with the rollout still limited to a few dozen locations nationwide, according to USA Today.

The technology expanded to roughly 500 locations by 2023, and the company has accelerated its deployment across the country since that time.

In the Cincinnati, Northern Kentucky, and Dayton region, 103 of the company’s 104 stores now carry the digital labels, officials confirmed. Kroger has deployed the labels in “almost all” of its 21 retail divisions nationwide, though it declined to offer a completion timeline.

Only three subsidiary banners have not yet adopted the technology: Harris Teeter, Ruler Foods, and the Midwestern Food 4 Less chain.

Walmart’s parallel digital shelf label rollout

Kroger’s expansion mirrors a similar push from Walmart, which plans to install digital shelf labels across all of its U.S. stores. Roughly 4,600 Walmart locations are expected to have the technology by the end of 2026, CNBC reported.

Walmart also extended its contract with digital label provider VusionGroup in December 2024 to speed up the nationwide rollout, the company announced.

A recent CivicScience survey found that most Walmart customers are not convinced digital shelf labels will benefit them.

The retailer has also drawn scrutiny after the U.S. Patent and Trademark Office granted it patents on AI tools capable of dynamically adjusting e-commerce prices.

Those patents fueled consumer concerns that algorithmic pricing could eventually move from online shopping to physical store shelves.

Together, Walmart and Kroger represent the two largest U.S. retail footprints and are now moving toward electronic shelf labels. Both companies are facing growing regulatory pressure from lawmakers who want tighter restrictions on the technology.

Federal and state lawmakers target Kroger’s digital pricing technology

The political pushback against electronic shelf labels has moved beyond rhetoric, prompting federal legislation that targets the technology and its potential for abuse.

In February, Senators Ben Ray Luján of New Mexico and Jeff Merkley of Oregon introduced the Stop Price Gouging in Grocery Stores Act.

The bill would ban surveillance pricing in grocery stores and prohibit the use of electronic shelf labels at large retail locations nationwide.

It targets the practice of using personal consumer data, including purchase history and facial recognition, to charge different customers different prices.

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“Congress must act to ensure that technologies are being used to improve the lives of Americans, not increase their grocery bills,” Luján stated.

The bill follows an August 2024 oversight letter from Senators Elizabeth Warren and Bob Casey, who warned the labels could help Kroger maximize profits.

At least twelve states, Arizona, Georgia, Illinois, Iowa, Maryland, Minnesota, Nebraska, New Jersey, New York, Oklahoma, Tennessee, and Washington, have introduced bills restricting digital pricing technology at grocery retail locations, the United Food and Commercial Workers union reports.

Kroger insists the technology will lower prices for shoppers

Kroger has pushed back against accusations that its electronic shelf labels are a pathway to surge pricing at the expense of everyday consumers. 

USA Today reported that Paula Kash, Kroger’s group vice president of retail operations, responded in a letter to Sens. Elizabeth Warren and Bob Casey: “Kroger does not and has never engaged in surge pricing”.

Kash added that the business model is built on lowering prices to attract more customers, not extracting higher margins through dynamic price changes. 

Company officials also noted the labels make it easier for stores to mark down products nearing their sell-by dates, potentially reducing food waste.

Kroger’s new chief executive, Greg Foran, who took the role in February, has placed affordability at the center of his early agenda. 

Foran told Bloomberg he plans to cut prices on “thousands of products” and fund those reductions through direct importing and operational technology.

Researchers deliver a mixed verdict on electronic shelf label risks

Not all experts share lawmakers’ concerns, and some academic research suggests electronic shelf labels could deliver measurable benefits to consumers.

Loannis Stamatopoulos, an associate professor at the University of Texas at Austin, told CNBC that the data do not support claims of surge pricing.

“The facts show there is no surge pricing currently occurring,” Stamatopoulos said, adding that grocery economics strongly incentivize customer retention.

The price of groceries has been front and center of national politics for some time, so we wanted to empirically test a claim that many prominent lawmakers have made, that electronic labels lead to price gouging

Research from the University of California, San Diego’s Rady School of Management found that dynamic pricing can reduce food waste by 21%.

Roger White, an economics professor at Whittier College, offered a more cautious view of the financial incentives driving the technology’s adoption.

Installing digital label systems at scale only makes financial sense if companies expect the investment to boost profits, White told CNBC.

What the standoff between Kroger and lawmakers means for shoppers

The standoff between Kroger and lawmakers shows no signs of cooling as both sides dig in on digital pricing technology.

Kroger is expanding across nearly all of its 21 retail divisions, even as federal and state legislators push bills to ban or sharply restrict the use of such labels, according to USA Today.

The practical takeaway is clear: shelf prices at a local Kroger can now change far more quickly than before.

Whether that speed translates into savings or higher profits will depend on the regulatory framework that emerges from the fights unfolding in Washington.

Related: Kroger forced to make costly store fix after federal lawsuit