Moving Against ESLs

At the federal level, Representative Rashida Tlaib, along with over 50 co-sponsors, introduced the “Stop Price Gouging in Grocery Stores Act” last year, and Senators Ben Ray Luján and Jeff Merkley have followed suit in the Senate earlier this year. In addition, over 100 price disclosure bills impacting the use of ESLs have been filed in 33 states and D.C.

The model for these bills is to require the use of paper or analog shelf pricing in any retail establishment larger than 10,000 square feet—the very retailers that will benefit most from the efficiency of ESLs. The proposed legislation also prohibits surveillance pricing based on the customers’ personal characteristics, such as data collection via facial recognition. These are two separate issues that have become bundled together in the legislative model.

The United Food and Commercial Workers International Union is pushing for these bans which it describes as the “predatory practice of ‘surveillance pricing,” and is seeking to generate grassroots support for the legislation in a national “Affordable Groceries and Good Jobs Campaign.”

The UFCW stance is not just about protecting consumers from predatory retail pricing practices. The union is also alarmed that the widespread implementation of ESLs threatens American jobs.

“Americans are hurting under the affordability crisis,” UFCW International president Milton Jones said in a statement. “We are starting this national campaign to stop corporations from being able to change prices in front of their eyes just because they live in the wrong zipcode or are a new parent. We are proud to work with elected officials in every part of the country to lead the fight for affordable groceries and good jobs because that is what our members want.”

Subtly, or not so subtly, retailers like Walmart are being positioned as the enemy, trying to squeeze every last cent from consumers already struggling under high inflation while also pushing hard-working Americans to the unemployment line.

“Large retailers are investing in AI, algorithms and data systems that can change prices instantly, individually and secretly,” said Washington State Representative Mary Fosse. “We need to stop the rip-off at the register before these practices become the norm. Technology should serve workers and consumers, not exploit them.”

Walmart Is Relying On Customer Goodwill In Implementing ESL

Walmart has yet to take on the ESL and dynamic-pricing controversy head-on. So far, it hasn’t produced consumer-facing videos or social media posts explaining the technology and how it’s being used, seemingly hoping to slip it into local stores unnoticed.

But Walmart can’t afford to sit idly by with such a pointed critique by Groundwork Collaborative’s executive director Lindsay Owens circulating with over 200k views, according to the organization.

In the TikTok video, Owens states, “They have sworn up and down that they aren’t going to use these electronic shelf labels for dynamic pricing,” and adds, “But look, they have partnered with a French company who builds electronic shelf labels for the sole purpose of doing data-driven dynamic pricing in grocery stores.”

So far, Walmart has issued two press releases about the rollout, positioning ESLs as a net benefit to customers and employees. “New Tech, Better Outcomes: Digital Shelf Labels Are a Win for Customers and Associates,” one announced. The latest emphasized how the new technology is “designed to help ensure accurate, consistent pricing, while helping associates save significant time by eliminating the manual task of changing prices. The result is more time for what matters: serving customers.”

The most recent 700-word press release outlines the positives—less busywork changing manual labels, quicker order fulfillment, more accurate price displays, and the enhanced ability to change prices not just up, but also down. However, it leaves the most politically-charged information to the very end.

“DSLs operate on a closed system and do not interact with shoppers or collect any information about them. Some have wondered what these labels can do. Once you see how simple they are, it clicks: there’s nothing like a camera or microphone in them, they just display prices,” it said.

These comforting assurances—“the impact it clear: faster service for customers, simpler process for associates and more time spent where it matters most on the sales floor”—may not be enough at a moment when consumers are already wary about how quickly technology is impacting their lives without their explicit consent.

NRF Slow To Address The Emerging Controversy

The National Retail Federation states it is aggressively fighting proposed state and federal algorithmic pricing laws, but it doesn’t appear to be proactive enough in getting the word out to consumers—I requested a statement, which it did not provide.

The audience for its most recent press release, “Debunking 5 Myths Around Algorithmic Pricing,” prepared by Mercy Beehler, vice president of government relations, was clearly for lawmakers, not consumers, despite a subheading that read, “What consumers really need to know about digital pricing technology.”

The NRF statement doesn’t define “algorithmic pricing” specifically. Few people understand what the term means and the very use of the word “algorithm” carries a negative connotation in the popular imagination. Further, it only makes passing mention of “surveillance pricing,” without going into any detail.

Instead, it simply reframes the concept of algorithmic pricing—with ESLs as the most forward-facing example of it in stores— as “a digital extension of pricing methods that have existed since the earlier forms of retail trade,” adding, “While the speed and scale of pricing analysis have changed, the fundamental principles behind how prices are set have not.”

But that, in a nutshell, is the essence of the ESL and algorithmic pricing controversy: consumers are distrustful about how retail prices are set. Despite the NRF’s assertion that digital pricing is used by retailers “overwhelmingly” to offer discounts to consumers, they are justifiably skeptical after years of rapid inflation.

The NRF argues that no new legislation is needed to protect consumers from technological enhancements of their existing pricing policies. “Retailers already operate under extensive legal requirements providing robust consumer protection against deceptive practices, such as price gouging and false advertising,” it stated.

“As we continue to shift toward a digital-forward economy, requiring blanket disclosures that frame all ‘algorithmic pricing’ as suspicious doesn’t promote transparency. It creates confusion and discounts legitimate practices that benefit consumers,” it continued.

More Vocal Reassurances Needed

In other words, the NRF’s position is that all the necessary guardrails to protect consumers from price gouging are already in place and that the same rules apply to algorithmic pricing as to traditional pricing models. But the suspicion and confusion it talks about in another context are what consumers are reacting too.

Neither the NRF or Walmart’s statements directly addressed those concerns. If retailers want to avoid new regulatory or legislative initiatives, they need to offer more direct, consumer-facing reassurances than they have so far and clearly unravel ESLs from surveillance pricing.

Simply put, swapping analog paper shelf labels with an electronic counterpart—one could argue that paper labels are more prone to human error than digital displays—is a totally separate issue from surveillance pricing. Surveillance pricing is a discriminatory practice that uses personal characteristics, like race, gender, and financial circumstances, to set individualized prices. ESLs don’t do that. They simply display prices.

Retailers need to unbundle these two very different issues in the public policy debate and clear up confusion in the consumers’ mind. ESLs offer real and meaningful benefits across the entire retail ecosystem, including:

• Greater, not less price transparency
• Swifter and more accurate price changes, both up and down
• More personally fulfilling retail jobs with greater opportunities for advancement after some of the grunt work is taken away
• Shoppers gain greater control of their budgets through more accurate prices displayed on the shelves

And, I might add, happier retail employees mean happier customers.

Unless the industry steps forward with more plain-spoken, direct communication to consumers, the debate will continue to be shaped not by what ESLs actually do, but by what anxious shoppers imagine they might do.

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