Finance Your Budget Tech tracking makes ‘surge pricing’ an option for the big grocery chains

Tech tracking makes ‘surge pricing’ an option for the big grocery chains

A stock image of a Woolworths employee putting paper price tags on shelves in Brisbane
Supermarkets could replace paper tickets with electronic prices and lead to price surging Photo: AAP
Twitter Facebook Reddit Pinterest Email

Retail experts predict a trial of electronic labelling on grocery items could foreshadow a move to “surge pricing”, which would allow supermarkets to determine the price of an item to reflect demand in real-time.

The pricing strategy could see customers pay more or less for an item at the click of a button from retailers, as demand rises and falls.

For example, the cost of umbrellas could be inflated during wet weather, while sunscreen and ice creams could become more expensive during a heatwave.

Svetlana Bogomolova, associate professor at the University of South Australia Business School, said electronic price systems could end up on Australian shelves and lead to “more dynamic pricing strategies”.

But she said the pricing strategy would not necessarily result in higher prices for consumers.

“Supermarkets operate in a highly competitive space with price being the focal point in the competition,” Dr Bogomolova told The New Daily.

“This means that even with a dynamic price changing system, the prices will remain market-driven and competitive. Consumers should not be much worse off.”

But the house always wins, according to Sven Brodmerkel, assistant professor of Advertising and Integrated Marketing Communications at Bond University.

Writing for the ABC, Dr Brodmerkel said retailers have been using algorithms to find out the maximum price consumers are willing to pay for services or items.

“Data used by pricing algorithms is gathered from seemingly benign sources such as loyalty cards and even postcodes,” Dr Brodmerkel wrote in the ABC article.

Ride sharing
Uber’s use of surge pricing was criticised in the aftermath of the London Bridge terror attack. Photo: Getty

The algorithms could also refer to past behaviour to determine consumer habits, he said.

Surge pricing already affects Australians on the ride-sharing app Uber, as well as for booking hotel rooms and airfares. The practice is more commonplace across Europe and the US.

Major UK supermarkets Tesco, Sainsbury’s and Morrisons have trialled electronic labels, The Telegraph reported.

A spokesperson for Sainsbury’s told The New Daily the supermarket had no plans to introduce surge pricing, but said the supermarket trialled electronic labelling two years ago.

A Morrisons spokesperson also rejected claims it would introduce dynamic or surge pricing.

“We’re trialling electronic shelf edge labels at a store in Leeds. It’s very early days but we’re looking at the potential benefits of an electronic system over the current paper-based approach.”

Marks and Spencer, or M&S, trialled surge pricing last year by discounting sandwiches early in the day to reduce their lunchtime rush, The Telegraph reported.

A Coles spokesperson said the Australian supermarket giant was not considering surge pricing.

The New Daily has contacted Tesco and Woolworths.

View Comments