On top of trying to deal with the Federal Trade Commission (FTC) on its merger with Albertsons, Kroger’s chairman and CEO got a letter in the mail this week that he probably wishes had never been delivered.
The letter came from U.S. Senators Elizabeth Warren (D-Mass.) and Bob Casey (D-Pa.), raising concerns about Kroger’s use of Electronic Shelving Labels (ESLs) to allegedly surge grocery prices and exploit consumers.
ESLs are those newfangled digital price tags that allow a store or company to use dynamic pricing, where it could change the prices of goods or meals based on things like the weather or store traffic.
For example, in Kroger’s case, it might jack up the price of milk and bread if there was a snowstorm coming. And in a flash, Warren claims, “corporations can price gouge, suddenly raising the consumer costs at times when certain products are in highest demand.”
The Senators contend that if ESLs are left unchecked, it could empower Kroger to gather data on customers to calculate just how much price hiking a customer can tolerate and then present each customer with personalized price tags at the grocery.
“It is outrageous that, as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out surge pricing and other corporate profiteering schemes,” Warren and Casey said.
Why Kroger?
Mind you, Kroger’s not the lone wolf in this giant puddle of consumer quicksand. Uber has been using surge pricing for years. Wendy’s reportedly wanted to use it this past winter before having to wave the white flag, and other major brands such as Sephora, Walmart, ALDI, Kohl's, Target, CVS, Walgreens, and IKEA reportedly employ it, too.
Also, this is not a lawsuit nor did the letter provide any evidence that Kroger is using ESL to its advantage. It’s just two lawmakers on a fact-finding mission, asking Kroger to provide information about its usage of ESL.
But just in name alone, Kroger as square one gets a lot of attention with its 3,000 stores nationwide – plus Warren and Casey’s claim dovetails nicely with the USDA's and state attorneys general's march on grocery prices.
Kroger responds
In an email to ConsumerAffairs, a company spokesperson replied that “Kroger’s business model is to lower prices over time so that more customers shop with us, which leads to more revenue that we then invest in lower prices, higher wages, and an even better shopping experience.
"Everything we do is designed to support this strategy, and customers are shopping more with Kroger now than ever because we are fighting inflation and providing great value," the spokesperson said. "Any test of electronic shelf tags is to lower prices more for customers where it matters most. To suggest otherwise is not true.”