Ready for sticker shock? Surge Pricing is Coming to a Store Shelf Near You.
Want ice cream on a hot day? It's gonna cost you.
Every summer, during peak heat days, my city runs out of fans to sell—every year. I live in San Diego, by the way. It's sunny most days here. You'd think people would get ready for the heat, but for some reason, it feels hotter than you thought. So, you gather the strength to head to the store to buy another fan.
Then, they're sold out.
We're all familiar with this very typical supply and demand scenario.
We understand. Unexpected heat waves happen, driving demand, and stores couldn't predict it, so they didn't stock enough fans. Alright, they're forgiven. It's fine.
Now, we all need to get ready for surge pricing.
If you've ever tried to schedule a Lyft after a concert lets out, you understand surge pricing. The increase in demand spikes, and prices follow, sometimes doubling or tripling the standard cost. Waiting thirty minutes to book or walking a few blocks away can drastically lower the price.
The same concept is coming to the shelves of the retail stores you frequent; in some markets, it's already here.
Streamlining Processes, Hiking Prices
NPR reported last week that Walmart is introducing electronic shelf labels. Instead of tiny stickers on the shelf in front of your favorite items, the company will install a small, digital barcode with the price. This technological advancement allows for more frequent and rapid price changes, paving the way for surge pricing to become more prevalent.
"The new labels allow employees to change prices as often as every ten seconds." - NPR.
The labels also save massive amounts of payroll hours. Employees can punch in the new price, and they will appear on the shelf. No more walking the entire floor and replacing every little sticker. If you've ever managed markdowns or price changes, you understand it's a tedious job on a massive scale.
Customers can also scan the new digital barcodes and access in-depth product knowledge. That part sounds cool.
The surge pricing possibilities are not as cool.
"If it's hot outside, we can raise the price of water and ice cream. If there's something that's close to the expiration date, we can lower the price — that's the good news," said Phil Lempert, a grocery industry analyst.
Um, okay, yes - being able to lower the price of an item that's about to expire is a good use of this technology. Raising the prices of water and ice cream on a hot day seems like a dick move.
Maybe Walmart (who raked in 648 BILLION DOLLARS last year) is fine with grabbing their customers by the ankles, turning them upside down, and shaking the coin loose from their pockets.
I guess that's how you rake in this many billions - use AI to fleece your customers.
It wouldn't be the first time a monster retailer did this.
Amazon’s Price Gouger, Nessie
Last year, the FTC sued Amazon because they created a secret price-raising algorithm called Project Nessie. The Nessie algorithm could predict what other online stores would follow Amazon's price increases.
So, Amazon would raise prices for fun-zies and get other companies to match their price increase, and then the item would hold that price until they decided to do it again.
How awesome is that?
There is no reason for this except straight-up greed, my friends.
"Amazon names all of their buildings after a successful project or something from the company's past. There is a building in Seattle named Nessie." - Dan, commenter on my original article about this.
Damn, you know?
Surge pricing is also called "dynamic pricing." It's the same thing.
Fast food company Wendy's made headlines earlier this year when it announced it would use dynamic pricing next year to offer customers discounts "on the fly."
Mmmm hmmmm.
Okay.
Experts have advised consumers to check the retailer's app prices before buying, or even calling a regular cab (the fees are regulated here) if they can when Lyft prices surge.
We've all accepted surge pricing from the hotel industry and airlines for years. Are the retail shelves any different?
We Need Food, Though
I think so.
Surge pricing is frustrating no matter what industry you're buying from. However, hotels, airlines, and Lyft are often used for fun or when we're on vacation. If you're traveling for work, hopefully, you can hand your employer the bill.
Food is another realm.
Food is a necessity, so hiking the price of water on a hot day seems kind of evil.
People are really struggling out here. Apartment buildings are also trying surge pricing techniques. They keep raising prices, and they're keeping out regular people working regular jobs just trying to live their lives.
A couple hundred dollars a month can derail your budget if you're counting on that money to live. There are families out here making four thousand dollars a month who are homeless because they can't get approved for an apartment.
What are we doing?
The country's biggest, most lucrative companies exploit state-of-the-art technology to charge top dollar for the everyday items people need the most. Then, when some outside forces trigger demand, they increase the price again when we really need it.
I don't have any answers here; I just want you to know what's happening.
Yes, you have less money every day. This is why. It's not because you go to Starbucks occasionally. It's not because you took your kids to Legoland for the day. It's because massive corporate monsters that make more money than you can ever imagine are squeezing you for every cent they can get.
I know we can't always shop at smaller retailers, but with surge pricing taking hold, we need to become savvy shoppers.
Shopping locally whenever possible sounds like a good move to me.
Because:
Water will cost more on a hot day.
Strawberries will cost more on the 4th of July.
And ice cream? Who knows. It may become unattainable.
Buy it now, friends.
Kit Campoy is an author and retail expert with 20+ years of experience leading retail teams. She thrived on building relationships with customers and motivating sales teams. Now, as a ghostwriter, she leverages this people-centric approach to craft compelling content that resonates and ignites brand loyalty.
Ugh! This is so depressing! I had no idea and it is such sneaky greed that goes under the radar that it is beyond wrong! But warriors such as you are sounding the alarm.
"If it's hot outside, we can raise the price of water and ice cream. If there's something that's close to the expiration date, we can lower the price — that's the good news,"
The key word in this statement is "can." Even if big grocers will lower prices the closer the products get to the expiration date, how close will they lower it and by how much?
In addition, Canada is moving towards removing Best Before dates (not expiry dates) to combat food waste. While I am behind the reduction of food waste, I can see Walmart and big grocery chains using that as an excuse to only have 1 markdown, or keep canned goods at the same price or higher for years without indicating how long they've been on the shelf.