Earlier this month, Walmart announced that it had been testing “digital shelf labels” in a Texas store, allowing it to make price changes to the more than 100,000 items on shelves using a mobile app, rather than having an associate physically change price tags. That experiment was evidently successful, as the company says it’s rolling out the digital shelf labels to 2,300 stores over the next two years.

There are some clear upsides for the retailer: It frees up in-store workers’ time and energy, makes it easier to keep track of stock, and helps fulfill customer orders.

But another obvious possibility is that in effect, digital price tags could allow Walmart to utilize a strategy that’s become known as “dynamic pricing,” which more or less means that it can change the price of items on the fly.

In a statement to Retail Brew, a Walmart spokesperson insisted that the new program “is not designed for dynamic pricing.” (Walmart has not responded to Fast Company‘s request for clarification.) But even the possibility is likely enough to make consumers wary. The ability for retailers to change prices on the fly may sound innocuous enough. But inflation-weary consumers are fixated on prices for everyday items more so than at any time in recent memory—and they’re concerned that it could lead to “surge pricing,” the pricing model utilized in other industries like ridesharing.

“Sixty-three percent of people are more budget-conscious than they were six months ago,” Carly Fink, president and head of research and strategy for Provoke Insights tells Fast Company, citing data from her company’s recently released Summer 2024 Trends Report. Shoppers are primarily concerned that retailers will change prices so rapidly that they can’t properly budget for shopping trips, and end up paying more than expected at the register.

Shopping could soon be a bit more dynamic

Could dynamic pricing be coming to a store near you? At certain retailers, maybe. But that may not be all bad for shoppers.

With the bout of high inflation over the past two years serving as a backdrop, and retailers trying to find ways to keep customers coming in (beyond announcing price cuts), a dynamic pricing model could “be an option to help these brands, they can maybe price something lower during less-busy times, and raise them during busier times,” says Fink. That means consumers may be able to take advantage of periods of lower pricing.

There are industries that utilize dynamic pricing already, including airlines, hotels, ridesharing, theme parks, and ticketed events, such as sports games or concerts. However, even in those cases, U.S. consumers still think it’s a fundamentally unfair pricing model.

A YouGov survey of 17 markets, published in mid-June, found that 56% of Americans say that dynamic pricing for concert tickets is “unfair,” 52% say the same for tickets to sporting events, and 57% say dynamic pricing for movie tickets is unfair, too.

In short: People aren’t sold on the dynamic pricing model, even in areas where they’re used to it. So the idea that it could be used in other, unfamiliar settings—like grocery stores or big box stores—is unsettling.

If Walmart does decide to implement dynamic pricing, it wouldn’t be the first retailer to test the waters. Surge pricing is coming to theme parks like Legoland, airline JetBlue introduced surge pricing for baggage, and perhaps most notably, fast food chain Wendy’s dabbled with the concept earlier this year, only to be met with significant backlash.

It’s possible, though, that many consumers don’t have a full understanding of what dynamic pricing could mean. While brands will undoubtedly use it to try to trim costs and increase revenue, consumers could also benefit by shopping during times when pricing is low—similar to hailing an Uber during non-peak times, charging your EV overnight when electricity rates tend to be lower, or taking advantage of happy hour pricing at restaurants.

“Only about a third of the population knows what dynamic pricing is in terms of restaurants,” says Fink, again referencing the data from her company’s recent report. “In that sense, brands who do dynamic pricing need to be very clear and understand what consumers’ expectations are before doing it.

But again, she says, given that many shoppers are already stretched thin by price hikes and inflation over the past couple of years, their patience with retailers—many of which have reported record-high profits recently—is hanging on by a thread.

“There’s a push and a pull that’s happening here,” says Fink. But consumers would do well to remember that dynamic pricing “can be advantageous, too.”

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11 thoughts on “Walmart is one of the biggest chains yet to use digital price tags. Here’s how that could affect shoppers”
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