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Kroger's Pricing Scheme 'Corporate Greed Is Out of Control'

That's just Elizabeth Warren being herself with her faux "consumer protection" persona - forever "outraged" in search of "corporate greed" or "collusions" or still "fighting shrinkflation."

Kroger's "dynamic pricing" is not a "surge pricing" and her example of water and ice cream is beyond ridiculous - it's extremely unlikely for store to change prices during the day's open hours, to avoid buyer's "surprise" at the counter, and it's not even close to AI - it's simple automation of what most large chains already do manually - like reducing prices on items that are about to expire, or on shelf longer than turnover requires, to reduce "shrinkage" from spoiled or unsold products - no need to restamp the prices or change stickers. It It's already done by some chains in UK and several EU countries. There are several of these "digital shelf" companies, to manage products in stock and on the shelves - same as they've done before but actual price changes would be electronic / digital, instead of manual - "cheaper, better, faster" as technology tends to do.

Eberly's example @#11 is much closer to what "surge pricing" might look like, but that still is not what "dynamic pricing" in supermarkets / grocery stores is - just automation and "efficiencies" using advantages of digital / connected tech, using the same basic algos they use today and 20 years ago, to change prices manually. Most already use 'loyalty' cards and apps to get "personal data" on your purchases, and to offer "personalized" discounts or alert you to "sales" on items they need / want to sell fast, so they can restock - goods turnover is everything in grocery business - that's how the sales (and therefore profits) are maximized, not through increasing prices/margins on some individual items at certain times and risk losing both sales and customers to competition.

"Sales" and "digital coupons/discounts" are examples of "dynamic pricing" - they are used to promote sales, not increase prices on-the-fly, or in response to demand aka "surge pricing."

WBTW, Kroger's average gross margin of 20% is lowest in grocery chains industry, with net profit of only 1.4% - Albertson's is 26% / 1.4%, Sprouts 35% / 4.5%, and "discounters" WGrocery Outlet 30% / 1.3%, Value Supermarket 27% / 2.2%, Walmart 27% / 2.2%, Publix 28% / 9.8% Dollar General 27% / 3.9%, Dollar Tree 30% / 3.1%, Costco 12% / 2.8%...

IOW, Kroger and Costco are extremely operationally efficient. Publix is extremely tax-efficient.

FTA: "The senators have previously introduced legislation to prevent shrinkflation, urged the Biden administration to use its executive authority to lower food prices" - exactly how would that be implemented? And isn't that why Biden team, thankfully, dropped "Bidenomics" and "fighting shrinkflation" like a hot potato in the first place?

Just more of the same hand-waving aimed at outraged economic illiterates by 'caring' politicians - "We fight for you against 'greedy' corporations!" - while they promote and enact policies that actually raise costs - and prices - on consumers.
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#12 | Posted by LampLighter at 2024-08-11 04:23 PM
Related...
"We're Entering an AI Price-Fixing Dystopia" ... "Algorithmic collusion"

No, it's not at all related to "dynamic pricing" (except slapping "AI" on them) - simply because it's totally different markets and price sensitivity, time lag of price changes and price elasticity - "price dynamics" - are entirely different.

And it's not "algorithmic collusion" - though FTC and politicians like Warren are trying to brand it that way - it's "algorithmic pricing" which is nothing new, has been used in commerce and retail since computers became widely available.

And it's only a case of "corporate greed" hand-waving when the prices go up "in unison" (which was the case everywhere during inflationary post-COVID period) - same as the case with gas prices, when politicians scream "collusion!" and announce all kinds of "investigations" and actions to "curb the greed" - but which makes them silent when prices go down "in unison."

RealPage, and their numerous competitors, simply provide the automated service (and related services, like tenant screening, billing, etc.) for something any landlord can already do by using Zillow or Redfin, Apartment's.com, Homes.com, etc. and using average $/sqft and average rent prices in given area and basic spreadsheet.

It can also backfire big time when the market changes directions, or people want to undercut competitors, e.g., to sell / rent faster or some other "human factor" - IOW, free market in action.

As was the case with Zillow failed experiment when they relied on their own tech: