Myth vs. fact: Surveillance pricing and digital shelf labels

Recent conversations about surveillance pricing and digital shelf labels have fueled misconceptions about how retailers set prices and use technology. While hypothetical scenarios often receive attention, there is an important distinction between technological capability and documented retail practices. There is no evidence of U.S. retailers using surveillance pricing tactics. 

The National Retail Federation supports the use of responsible pricing technology. Digital shelf labels display prices — they do not decide them. Understanding the difference between pricing technology and pricing decisions is essential to understanding claims about surveillance pricing. 

Groundwork Collaborative President and CEO Lindsey Owens is currently conducting a media tour about her book, “Gouged,” saying that major retailers use consumer data and algorithms with other digital tools to find out how much shoppers will pay. It’s important to differentiate between the hypothetical and theoretical situations Owens is talking about, and the reality of retail business today. 

Here’s the truth about retail pricing. 

Myth: Retailers can use customer data, AI tools and shopping assistants to determine exactly how much an individual shopper is willing to pay and then charge that person a higher price.

Fact:

Critics describe hypothetical “surveillance pricing” scenarios in which customer data is used to determine individualized prices. However, these claims are largely speculative and are not supported by evidence that U.S. retailers are broadly employing such practices in stores.  

Retail pricing continues to be driven by traditional business factors such as costs, inventory levels, competition, seasonality, geography and consumer demand. 

Myth: Digital shelf labels are creating an infrastructure for “surveillance pricing” that allows retailers to change prices in real time and charge different customers different prices based on personal data. 

Fact: 

Digital shelf labels are often wrongly conflated with surveillance pricing. DSLs simply replace paper shelf tags and display a retailer’s posted price. They do not collect customer data, track shoppers, recognize individual consumers or display different prices to different people. 

There is no evidence that U.S. retailers are using digital shelf labels to engage in surveillance pricing, personalized pricing or surge pricing in stores. 

Myth: Retailers are using digital shelf labels to change prices every few minutes based on demand, weather, time of day or the person walking down the aisle.

Fact: 

Digital shelf labels are display technology, not pricing technology. Retailers primarily use them to improve pricing accuracy, streamline promotions, reduce labor costs associated with paper tags, and ensure consistency between shelf and checkout prices. 

Academic research examining more than 180 million transactions at a major U.S. grocery retailer found no meaningful increase in temporary price increases after it adopted digital shelf labels, undermining claims that retailers are using the technology to facilitate dynamic or surge pricing. 

The truth about retail pricing 

The debate over surveillance pricing is really a debate about whether retailers will one day use personal data to tailor prices to individual consumers. Digital shelf labels are frequently cited in that discussion, but there is no evidence that U.S. retailers are using DSLs to track shoppers, display individualized prices or engage in real-time surveillance pricing. Digital shelf labels are primarily an operational tool that improves efficiency, pricing accuracy and customer experience. 

As attention on surveillance pricing claims is renewed, it’s worth separating documented retail practice from speculation. Anyone researching the topic should press for evidence over hypotheticals.  

Capability is not evidence of conduct without evidence. None exists, and the truth matters.