Senators call Kroger’s dynamic pricing a corporate profiteering scheme

U.S. Sens. Bob Casey (D-PA) and Elizabeth Warren (D-MA) are questioning Kroger Co.’s use of digital price tags, or Electronic Shelving Labels (ESLs), in 500 of its grocery stores, a move the lawmakers say could be exploiting working families.

“These digital price tags may enable Kroger and other grocery chains to transition to dynamic pricing, in which the price of basic household goods could surge based on the time of day, the weather, or other transitory events — allowing stores to calibrate price increases to extract maximum profits at a time when the amount of income spent on food is at a 30-year high,” the senators wrote in an Aug. 5 letter sent to Kroger Chairman and CEO Rodney McMullen.

In their letter, Casey and Warren pointed out that the widespread adoption of ESLs appears poised to enable large grocery stores “to squeeze consumers to increase profits.”

“Indeed, everyday Americans still struggle to put food on the table because giant corporations, facing little competition, can force customers to pay too much for essential grocery items while they further increase their profits,” wrote the lawmakers.

Kroger is already earning enormous profits, according to their letter, and reported an operating profit of $3.1 billion in fiscal year 2023, with gross profit margins that have remained above 20 percent for the last five years.

“The increased use of dynamic pricing will drive company profits higher,” they wrote, “leaving consumers with the bill.”

Kroger has also proposed placing facial-recognition cameras on its digital shelves that can make different offers to shoppers based on their age, gender, or potentially their race and other personal characteristics, wrote the senators, who are concerned about whether Kroger, in its partnership with Microsoft for these cameras, is adequately protecting consumers’ data.

“It is outrageous that… grocery giants like Kroger continue to roll out surge pricing and other corporate profiteering schemes,” they wrote.

Casey and Warren requested further information from McMullen to better understand Kroger’s justification for and the risks associated with ESLs, including how many Kroger stores are using such platforms, how the company establishes dynamic pricing, and how customers will be informed about price changes.

They asked McMullen to provide his answers to them by Aug. 20.

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