Produce is shown at a west-end Toronto Sobeys grocery store in June, 2023.Graeme Roy/The Canadian Press
Vass Bednar is a contributing columnist for The Globe and Mail and host of the podcast Lately. She is the executive director of McMaster University’s master of public policy program and co-author of The Big Fix.
We used to flip through weekly flyers to note deals on key food items, but soon the price of your favourite foods could change multiple times per minute. While already popular in Europe and the U.S., electronic shelf labels are popping up in Canada as Loblaws, Sobeys and Metro switch over to a digital system. Right now, it seems like these price labels are most popular with and applicable to grocery stores. Walmart recently announced that its 2,300 stores in the U.S. will have digitized shelf labels by 2026, American shoppers are seeing them at Kohl’s and Kroger’s, and Instacart’s platform already integrates with these tools.
These electronic labels generally leverage Bluetooth technology, and can change the cost of groceries up to six times per minute. In a lot of ways, they are quite useful: They save the parent company both money and time (though it’s unclear whether any new-found efficiencies will be passed on to consumers or shareholders). They reduce paper waste, and through the use of QR codes can convey more information than a small label – such as stock availability or whether an item is gluten-free. Digitizing price labels also allows a grocer to lower the cost of soon-to-expire foods, incentivizing a purchase and reducing food waste.
But the ability to micro-calibrate prices in this way has downsides, too. It allows companies to raise their prices more easily. This could be done in conjunction with price shifts that follow broader market volatility – say, if the price of produce shifts based on harvest cycles and global weather events. In that case, companies can raise prices with the press of a button, potentially by more than they need to, making extra profit while blaming everything on outside forces. In effect, this allows companies to hide extra profit, as many did during the initial shock of the COVID-19 pandemic.
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Companies using these tools could also threaten consumer privacy by integrating with facial-recognition technology – a dystopian combination that American grocer Kroger has the capacity to do through their partnership with Microsoft. No one wants surge pricing for their groceries, or to feel like they shopped at an “expensive” time of day. Not everyone can game these pricing systems to optimize their savings – and no one should have to.
Better policy could ensure basic stability with electronic shelf labels. We already regulate labels to ensure products are safe, information is clear and accurate, and consumer rights are protected by mandating language requirements and clarity on ingredients. Quebec remains the only province to implement per-unit pricing. Why not regulate pricing labels? We should set some ground rules for their new-found dynamism. We tolerate algorithmic pricing in a digital context, mostly because we don’t fully appreciate it – the nuance, and when it is occurring. While it seems unlikely that the companies that deploy this technology would want to trash the trust that they have built with customers by charging them more for ice cream on a hot day, the risk of price gouging is real. Plus, barcodes are slowly being replaced by QR codes, which will accelerate the adoption of digital labels.
In the U.S., senators have sounded the alarm on how electronic shelf labels can “calibrate price increases to extract maximum profits,” but in Canada, no one seems to have said anything – yet. Some countries are considering or enacting rules requiring how algorithms determine prices, and China has cracked down on price discrimination based on user profiles. In late 2022, a coalition of consumer rights and public interest groups called on American grocers to rethink digital-only deals, claiming they may violate the Federal Trade Commission Act and leave non-digital consumers overpaying at a time of high inflation.
We don’t need to ban digital labels for food products, but we should set some basic guardrails in terms of transparency and disclosure: noting when the price was last changed, and why; forecasting when it may change again; preventing price personalization based on facial-recognition technology or loyalty program participation; and ensuring an alternative to a smartphone can be provided, if supplementary information will be conveyed by QR code.
Forget about sticker shock – welcome to the era of screen shock. As consumers, we’re not just buying groceries; we’re also entering a relationship with a dynamic pricing system that’s constantly recalibrating itself. It’s time to ask: Who benefits from these shifts, and at whose expense? Let’s demand a blend of transparency, fairness and accessibility in the evolving world of digital pricing.