Shoppers are wary of digital shelf labels, but a study found they don’t lead to price surges

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Digital price labels, which are rapidly replacing paper shelf tags at U.S. supermarkets, haven’t led to demand-based pricing surges, according to a new study that examined five years’ worth of prices at one grocery chain.

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But some shoppers, consumer advocates and lawmakers remain skeptical about the tiny electronic screens, which let stores change prices instantly from a central computer instead of having workers swap out paper labels by hand.

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“It’s corporations vs. the humans, and that chasm between us goes further and further,” said Dan Gallant, who works in sports media in Edmonton, Canada. Gallant’s local Loblaws supermarket recently switched to digital labels.

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Social media is filled with warnings that grocers will use the technology to charge more for ice cream if it’s hot outside, hike the price of umbrellas if it’s raining or to gather information about customers.

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Democratic U.S. Sens. Elizabeth Warren of Massachusetts and Bob Casey of Pennsylvania fired off a letter to Kroger last fall demanding to know whether it would use its electronic labels as part of a dynamic pricing strategy.

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Lawmakers in Rhode Island and Maine have introduced bills to limit the use of digital labels. In Arizona, Democratic state Rep. Cesar Aguilar recently introduced a bill that would ban them altogether.

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The bill hasn’t gotten a hearing, but Aguilar said he’s determined to start a conversation about digital labels and how stores could abuse them.

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“Grocery stores study when people go shopping the most. And so you might be able to see a price go down one day and then go up another day,” Aguilar told The Associated Press.

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Researchers say those fears are misplaced. A study published in late May found “virtually no surge pricing” before or after electronic shelf labels were adopted. The study was authored by Ioannis Stamatopoulos of the University of Texas, Austin, Robert Evan Sanders of the University of California, San Diego and Robert Bray of Northwestern University

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The researchers looked at prices between 2019 and 2024 at an unnamed grocery chain than began using digital labels in October 2022. They found that temporary price increases affected 0.005% of products on any given day before electronic shelf labels were introduced, a share that increased by only 0.0006 percentage points after digital labels were installed.

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The study also determined that discounts were slightly more common after digital labels were introduced.

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Economists have long wondered why grocery prices don’t change more often, according to Stamatopoulos. If bananas are about to expire, for example, it makes sense to lower the price on them. He said the cost of having workers change prices by hand could be one issue.

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But there’s another reason: Shoppers watch grocery prices closely, and stores don’t want to risk angering them.

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“Selling groceries is not selling a couch. It’s not a one-time transaction and you will never see them again,” Stamatopoulos said. “You want them coming to the store every week.”

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Electronic price labels aren’t new. They’ve been in use for more than a decade at groceries in Europe and some U.S. retailers, like Kohl’s.