Though you might have seen them at Kohl’s department stores, digital shelf labels are yet to be commonplace at US grocery retailers, with just 5-10% of stores using them. That contrasts sharply with European grocers where about 80% do so. But the technology appears poised for growth here.
The appeal of electronic labels is clear. Stores have greater flexibility to change prices with minimal labor required. An extensive relabeling task that might take two days to complete manually can be done in just a few minutes digitally. Stores in Norway and Belgium that have used them for over a decade change prices as often as 100 times a day to enable a real-time price matching tactic. Supporters also cite stores’ ability to minimize food waste through reductions when products near their expiration dates, and even in minimizing paper usage. Stores can aggressively push aging products with up to 90% discounts, still preferable to a complete loss on them. Digital tags can also augment other opportunities for interacting with customers, such as aiding location of products in stores, finding recipes, and even providing personalized deals related to age or gender for example.
Critics worry though that the labels could easily result in surge pricing, where prices increase according to environmental factors like weather, holidays, or even shortages. One can simply look to Uber to find a successful implementation of that tactic. Several lawmakers have been sounding the alarm about this concern as well as the potential for digital labeling to eliminate more jobs.
A multi-year academic study was recently released though, finding that virtually no surge pricing occurred at stores using the digital labels, and that slightly more discounting did happen. Consumer behavior might explain this finding. Consumers tend to be price sensitive when it comes to groceries, and price increases may be noticed and punished by defecting to competitors. You can imagine how unhappy customers would be to find that a product they just purchased had increased in price since they picked it up from the store shelf. Grocers rely on repeat purchases in a way that sellers of bigger-ticket items do not.
Walmart, Kroger, and Whole Foods are planning for the expansion of electronic shelf labels this year. Though they claim this will primarily be a means to discount products, increases are also made much easier. Stores have determined that any price hikes should occur during closed hours.
Activities:
- Ask students: Have you seen electronic shelf labels (ESLs) at grocery stores or other retailers? Given that they are expensive to implement (there are thousands of items in the typical store and each ESL is at least $5), what do you think is the primary motivation to do so?
- Have students consider the pros and cons of implementing electronic shelf labels in a retail store. This is a video from PBS NewsHour that you could show: https://www.youtube.com/watch?v=jf13kpWUc1o.
- Ask students to form small groups. Ask them to make a list of 10 items they regularly purchase from a grocery or convenience store, and record where they buy them and the specific price for each, as closely as they can recall. Then have them look up the real prices. How close did they get? If the price were to increase by 5%, would they notice? Would they shop elsewhere? What about 10%?
Sources: Williams, Jennifer, (27 July 2025) Welcome to the Grocery Store Where Prices Change 100 Times a Day, Wall Street Journal. Durbin, Dee-Ann, (09 Jun 2025) Shoppers are wary of digital shelf labels, but a study found they don’t lead to price surges, APnews.com.
