Elizabeth Warren just accused Kroger of raising prices as ‘families struggle to pay to put food on the table’

Elizabeth Warren is targeting one of the largest US supermarket chains over potential price hikes.

In a recent letter, Massachusetts lawmaker and fellow Sen. Bob Casey of Pennsylvania charged that Kroger’s transition to electronic shelf labels (ESL) could allow it and other chains to dynamically price food, creating shortages around essential goods by setting their price “such as plane tickets. “

“Widespread adoption of digital price tags appears poised to allow large grocers to squeeze consumers to increase profits,” said the letter, sent last week to Kroger CEO Rodney McMullen. “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 food items while increasing their profits.”

Kroger, which operates nearly 3,000 stores in the U.S., began implementing ESLs in stores back in 2018. The new technology, called “Kroger Edge,” gave the company the power to instantly change prices across dozens of stores. When Edge was first announced, it was touted as a way to make shopping more consumer-friendly. The tags would include video ads and coupons and allow shoppers to easily search for specific brands on their smartphone and even browse products based on dietary restrictions.

But the technology has also raised concerns about so-called “surge pricing.” Just like Uber prices go up during rush hour, grocers might raise the price of ice cream on a hot day or hot chocolate during a snowstorm. Groceries, rather than having a single set price for everyone to understand and compare, would fluctuate not only according to circumstances, but potentially according to the shopper, allowing the store to “… find ways to extract the maximum amount of profit from each customer. “, the senators wrote.

In the last decade, more companies have moved from setting prices to displaying individualized prices for customers. Uber, in addition to raising overall prices when demand is higher, has been accused of charging riders more when their phone battery is low. Staples showed online shoppers different prices for identical products based on their location, while travel site Orbitz showed higher prices for Mac users, the Wall Street Journal reported. These largely legal practices allow AI to “pick its pocket,” an anti-surveillance activist wrote last month, just before the Federal Trade Commission announced a major investigation into differential pricing.

Kroger, in a statement to wealthsaid the company’s digital labels were never intended to be used to raise prices for consumers.

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“Kroger’s business model is to lower prices over time so more customers shop with us, which leads to more revenue that we then invest in lower prices,” the company said. “Any test of electronic shelf labels is to reduce prices more for customers where it matters most. To suggest otherwise is not true.”

Kroger announced that it is expanding its ESL operations in 2023, bringing the technology to 500 US stores. In 2024, the company partnered with Intelligence Node, a retail analytics firm that uses AI to provide dynamic pricing.

In a press release announcing the partnership, Intelligence Node made no mention of dynamic pricing, saying only that it would help Kroger “enhance online shopping by providing an experience that better informs shoppers when choosing products and purchase decisions”.

Other grocery store operators have followed in Kroger’s footsteps. In June, Walmart, the largest U.S. supermarket chain, announced it would implement ESLs in 2,300 stores by 2026. Whole Foods and Amazon Fresh have also begun making the transition.

The senators concluded the letter with a list of questions for Kroger to provide by Aug. 20, including what the average price change was for goods subject to dynamic pricing and whether Kroger ever changes the prices of goods more than once at one time. day.

“It is outrageous that as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out price gouging and other corporate profiteering schemes,” they wrote.

This story was originally featured on Fortune.com