Shoppers are angry and confused as retailers bring AI pricing tools and digital price tags into the grocery aisle

Americans accepted the moving price on the airline ticket, the hotel room and the ride across town. The grocery aisle is where the acceptance runs out. The Associated Press reported this weekend that consumers are angry and confused about the increasingly technical ways restaurant chains and major retailers set prices: digital tags replacing paper labels in the aisles, and artificial intelligence tools that help a business decide what to charge by predicting how shoppers will react.

The fear has a name, and the name is doing much of the work. Surveillance pricing describes prices tailored to the individual, built from personal data the shopper may not know was collected. Whether stores are actually doing that at scale is contested. A Federal Trade Commission report identified at least 250 clients using tools capable of tailoring prices, and Target settled a 2022 lawsuit for 5 million dollars over allegations that it used geofencing to change prices based on where a shopper was standing. The National Retail Federation answers that individualized in store pricing is largely speculative and not supported by evidence of broad use.

The retailers say the tags are about labor, not about the shopper. Walmart chief executive John Furner wrote last month that digital price tags save workers time and keep prices current, that they are not used to raise prices based on the weather, the time of day or the individual, and put it in one line: we price the product, not the person. Katie Thomas, who leads a consumer behavior think tank at the consulting firm Kearney, framed the tension for the AP: there are major tensions right now between who is really going to have the power with these algorithms and bots and AI, the companies or the shopper.

Governments have started answering that question for their own jurisdictions. Seattle city council voted on September 22 to ban grocery stores from using artificial intelligence and personal data to set individual prices, the first ban of its kind in the country, covering chains with more than 20 locations while leaving ordinary coupons and senior and veteran discounts alone. Maryland, New Jersey and Connecticut have also enacted restrictions on using personal data to set retail prices. The posted price, the same for everyone who walks up to the shelf, has been the custom since the 1860s. What the fight is about is whether that custom survives the algorithm.