Surge Pricing And Grocery Costs – What’s Really Going On?

It's safe to say that the last time you went grocery shopping, at one point you said under your breath, “damn, this stuff is expensive.” You understand that the marketplace is all about supply and demand, and if something becomes more expensive to produce, the price must go up. But there are other market forces, invisible market forces, that are also at play here. 

According to Seattletimes.com,
‘Surge pricing refers to retailers changing the price of a product based on demand. Surveillance pricing, on the other hand, involves companies collecting consumer data to build individual profiles and using AI to set personalized prices depending on the consumer. The goal of the latter is to determine how much someone is willing to pay for an item based on their consumer profile.’ 

What is it?

The idea that two people could walk into the same store, buy the same product and check out at the same check stand, and one person will pay more than the other. Well, that just seems wrong to me. But that's what Surveillance surge pricing is all about. 

It's happening very quietly, but it's happening all through the US. So much so that the Federal Trade Commission did a study on the process.  

Groundwork Collaborative, Consumer Reports and More Perfect Union did a study of how Instacart operates which showed that they had an AI system that was secretly manipulating prices and showed discrepancies between consumers that could total up to a family paying more than $1200 a year more for groceries. 

Next time you go into the grocery store, pay attention, and look around. Surveillance pricing and electronic shelf labeling are part of a push by major retailers like Albertsons, Kroger, and Instacart. Now just add everybody's favorite buzzword “AI” to the mix and you’ve got some interesting problems that we're going to have to sort through in the near future. 

Are we stuck with this?

Legislation is being advanced here in the state. House Bill 2481 that would limit or eliminate the use of surveillance surge pricing. The Washington Retail Association and Northwest Grocery Retail Association are both opposed to the measure.