Customer concern growing as US retailers adopt next-generation pricing tools

Beyond high prices, shoppers say they’re feeling rising tensions about increasingly high-tech ways businesses from grocery stores to department stores to restaurants are setting those prices. 

Big picture view:

In grocery stores across the country, more customers are being met with digital price tags on shelves, replacing the old paper ones. Artificial intelligence tools can help businesses optimize pricing by trying to predict how customers might respond to changing numbers. 

That’s where "dynamic pricing" and "surveillance pricing" come into play, the Associated Press reported. The terms have social media users wondering if different people are getting different prices for the same product. 

Why you should care:

Dynamic pricing is the process of adjusting prices as market conditions — like supply and demand, available inventory, time or location — change. Many customers have probably already encountered it. Examples include ride-hailing companies raising  fares when lots of people need cars at once, airline tickets and hotel room prices changing as availability and demand shift or even retailers lowering prices when they see a product stop moving off store shelves. That does not mean every shopper will always see the exact same dynamic price. 

Web data company Docodo found in 2025 that about half of U.S. price changes it recorded across a wide range of products decreased.

IS YOUR PERSONAL DATA CHANGING WHAT YOU PAY ONLINE?

Surveillance pricing, also known as personalized pricing, means offering different prices to different customers based on where they are, what they make, web-browsing history and other information about individual shoppers or groups of shoppers. That means two people looking for the same product could potentially receive different offers because of information connected to them.

But it’s not clear how widely businesses use personalized information to customize prices. 

California sued Target four years ago, alleging the Target app displayed lower prices until shoppers walked inside the store, then raised them. Target eventually agreed to a $5 million settlement. It also agreed to ban the use of "geofencing" to increase prices. 

Also unclear — and possibly part of the growing trepidation for shoppers — is the role artificial intelligence plays in price setting. 

Algorithmic pricing uses software to recommend or even automatically set prices. AI can help software identify sales patterns and scan what the competition is charging. From there, it can help predict demand and estimate how price changes could affect sales. 

Global consulting company Simon-Kucher shared with the AP the results of a survey of more than 2,200 business leaders across 39 industries. The survey found that 41% use AI software for "marketing intelligence" and 28% use it for "real-time price optimization." That means setting prices that increase profits, attract shoppers or conduct clearance sales.

The National Retail Federation represents big and small stores. It says algorithmic pricing is a new way of doing what retailers have been doing for years without AI. 

What they're saying:

"There are major tensions happening right now between who’s really going to have the power with some of these algorithms and usage of bots and AI: the companies or the shopper," Katie Thomas, who leads an internal consumer behavior think tank at the management consulting firm Kearney, told the AP.

But Thomas said a lack of transparency has made shoppers suspicious about data retailers collect and how they use it. That, in turn, she says, has led to speculation that sometimes isn’t true.

She pointed to social media posts that falsely claimed that electronic shelf labels Walmart plans to use can scan shoppers’ faces or smartphones to help set individual prices. 

Walmart CEO John Furner defended digital price tags in a statement in September, saying they save the time it would take employees to change paper price stickers on store shelves, something he called "a time-consuming and unrewarding task."  

Furner said that while Walmart lowers prices when they can pass savings along and raise them when their costs go up, he insisted that "using someone’s income, shopping history or moment of need" as a basis to change prices would violate the company’s "every day low prices" model it is built upon. 

"We price the product, not the person," Furner said.

Dig deeper:

Lawmakers in at least 30 states have been considering pricing bills this year, including laws that would target algorithmic and personalized pricing, the National Conference of State Legislatures said. The organization said the legislation covered goods and services including event tickets, digital coupons, restaurant fees and gratuities, gender differences in pricing, towing and veterans’ benefits assistance service providers.

The Federal Trade Commission’s research into surveillance pricing found that third-party pricing companies can use surprisingly detailed information when helping retailers set prices, promotions or product rankings. That information can include:

• Your approximate or precise location
• Browsing patterns and history
• Shopping and purchase history
• Products left in an online cart
• Demographic information
• The time, location or channel used to make a purchase
• Your behavior and preferences on a website
• Even your mouse movements on a webpage

The FTC has said it cannot ban the practice of businesses collecting information about who you are, what you search for, what you buy and how you behave online in every case, but it proposed an enforcement policy that warns businesses that if they do not disclose  disclosing their use of personal data to set individual prices could violate consumer protection laws. 

 

Consumer