Luján, Merkley want to ban digital price stickers at grocery stores

Sen. Ben Ray Luján, D-N.M., wants to ban price gouging and digital price tags on grocery store shelves.

“Anything that is contributing to the increased cost or price gouging with food should be addressed and needs to be addressed,” Luján said.

Luján and Sen. Jeff Merkley, D-Ore., introduced the Stop Price Gouging in Grocery Stores Act earlier this month, and a large grocery store workers union is backing the bill.

Concern over potential surveillance pricing at grocery stores has been brewing in Congress for the last several years, with a particular focus on Kroger and Microsoft's partnership on electronic shelf labels. The companies announced a pilot program using electronic shelf labels and a smart technology system to hyper-personalize the in-person shopping experience in 2019.

However, a working paper published last year found minimal effect on grocery store prices from electronic shelf label use, and the researchers behind it doubt grocery stores have a real motive to surge prices for individual consumers.

Along with banning electronic shelf labels in grocery stores that are 10,000 square feet or larger and requiring disclosure of facial recognition technology, the new bill would prohibit surveillance pricing at in-person grocery stores. Surveillance pricing is when personal consumer data is used to offer a customer the highest price they’d be willing to pay and typically is used by online retailers. The bill also establishes ways to enforce those restrictions.

“There needs to be transparency in these spaces so that we don't see additional price gouging on top of the tariffs that are coming from (President) Donald Trump,” Luján said.

Walmart, Whole Foods Market and Kroger — the company that owns Smith’s — all use electronic shelf labels in some of their stores. Walmart and Kroger did not respond to Journal requests for comment, and Whole Foods did not make someone available to speak about the legislation or provide comment.

A Whole Foods official confirmed the grocery chain is piloting electronic price signs in select stores, but said the retailer does not use surge or dynamic pricing or facial recognition technology.

In 2024, Walmart announced it planned to roll out electronic shelf labels to 2,300 stores by 2026, touting the technology for increasing productivity by making it easier to update shelf prices. The digital price tags can be changed much more rapidly than physical price stickers. 

One of the bill’s prominent backers is the United Food and Commercial Workers International Union, which represents more than a million workers, including roughly 4,000 Smith’s and Albertsons employees in New Mexico. The union supports the bill because grocery price changes also affect its members when they shop for their own families, said UFCW International Vice President Ademola Oyefeso, and automation of grocery store work could cause union members to lose work.

He also thinks electronic shelf labels could cause confusion over prices and make the customer experience more negative, bringing more complaints to grocery store workers.

“This legislation is attacking the affordability crisis. Without legislation like this, grocery prices will go up,” Oyefeso said.

Ioannis Stamatopoulos, an associate professor of operations at the University of Texas at Austin, has looked for evidence that grocery stores are using electronic shelf labels to raise prices and hasn’t found it. Banning the technology could put the U.S. behind on reducing grocery store waste, according to Stamatopoulos. The shelf labels can be used to more quickly offer discounts on food close to its expiration, something he’s seen happen in European grocery chains he’s worked with.

Stamatopoulos, along with Robert Sanders of the University of California, San Diego, and Robert Bray of Northwestern University, authored a working paper that examined product prices at a large U.S. grocery retailer that’s been mentioned in regulator communications — the researchers won’t share the retailer’s name. They found virtually no surge pricing before or after electronic shelf labels were used. Temporary price increases affected roughly 0.005% of products on average before the electronic labels. That rate changed by 0.0006 percentage points after the electronic labels were in use.

They’re still updating the study with another year of data, but found the electronic labels have “no effect on temporary price increases and only limited effects on temporary price decreases."

Stamatopoulos thinks that’s because grocery stores value acquiring and retaining customers over the long term, and grocery shoppers are very sensitive to price increases.

“Where they really make money is if week after week you go there and you fill your entire basket,” he said. “Even if there's a small chance that they'll piss you off with a surge price, they won't take that chance.”

Cathy Cook covers the federal government for the Albuquerque Journal. Reach her via email at ccook@abqjournal.com