Electronic Labels Have Not Led to Surge Pricing in US Grocery, Despite Concerns

Abstract

The adoption of electronic shelf labels (ESLs)—digital tags enabling instantaneous price updates—by Walmart and Kroger, the two largest US grocery retailers, has triggered regulatory scrutiny at both federal and state levels. Policymakers are concerned that ESLs have facilitated surge pricing strategies, whereby retailers increase prices in response to factors such as time of day, weather conditions, or demand spikes. We examine these concerns with comprehensive transaction data from a US grocery retailer with $3 billion in annual revenue, which gradually implemented ESLs across over 100 stores beginning in October 2022. We find virtually no surge pricing either before or after ESL adoption. Specifically, temporary price increases (surges) affected only about 0.0050% of products on an average store–date before ESL adoption, and this rate changed insignificantly by +0.0006 percentage points (p-value 0.94) after adoption. Our results suggest that recent regulatory concerns regarding surge pricing in grocery retail are misplaced.