Kroger under fire for AI-powered dynamic pricing

Occurred: August 2024

US supermarket chain Kroger prompted alarm for adjusting the prices of its products in real-time using artificial intelligence. 

Kroger's dynamic pricing system enables real-time price adjustments based on factors such as demand and customer data. The company introduced electronic shelf labels (ESLs) with "Kroger Edge" technology in 2018, expanding the initiative to 500 stores across the US by 2023.

Kroger now plans to install cameras at digital displays that use facial recognition to determine customers' gender and age, presenting personalised offers based on this information, claiming it will enhance customer experience.

The move prompted US senators Elizabeth Warren and Bob Casey to write to Kroger CEO Rodney McMullen expressing alarm about potential privacy violations and increased inequality.

Critics argue that dynamic pricing can lead to price surging or gouging, particularly for low-income and vulnerable customers who may be disproportionately affected by rapidly changing prices. 

Some also say it amounts to little more than corporate profiteering and express concerns about the lack of transparency.

Dynamic pricing

Dynamic pricing, also referred to as surge pricing, demand pricing, or time-based pricing, and variable pricing is a revenue management pricing strategy in which businesses set flexible prices for products or services based on current market demands. 

Source: Wikipedia 🔗

System 🤖

Operator: Kroger
Developer: IntelligenceNode; Kroger; Microsoft
Country: USA
Sector: Retail
Purpose: Set prices
Technology: Computer vision; Facial recognition; Machine learning; Pricing algorithm
Issue: Ethics/values; Fairness; Privacy