First they came for the digital coupons. Now they’re taking aim at digital price tags.
Lawmakers in at least three states have proposed legislation that would restrict or outright ban the use of electronic shelf labels that some critics fear could be used to unfairly manipulate pricing for everyday necessities.
Democratic state representative Cesar Aguilar of Arizona has introduced a bill that aims to protect consumers in several ways. It would limit price gouging by restricting how high retailers can raise prices during an emergency. It would require retailers to clearly spell out their return policies. And, it declares that “a business in this state may not use digital shelf labels.”
That’s “may not,” no exceptions. That would come as unwelcome news to retailers like Kohl’s, which has been using digital price displays for years, and Walmart and Kroger, which are in the process of introducing their own digital shelf tags in more of their stores.
Rhode Island is considering a similar, though slightly less restrictive, measure that wouldn’t ban digital price tags so much as it would make them superfluous. Democratic state representatives Megan Cotter and David Bennett have proposed legislation to amend the state’s transparency in pricing law, to state that “an electronic shelving label by itself would not satisfy the disclosure and display requirements,” and that physical, printed price tags would still be necessary.
“These labels can change six times per minute, which makes them potentially inconsistent for consumers,” Cotter told a House committee last week.
Several other states, including California, Colorado, Georgia, Illinois and Massachusetts, have proposed separate legislation to ban “surveillance pricing,” where stores may charge different prices for different shoppers based on personally-identifiable information obtained through cameras, biometrics or other monitoring methods. California’s bill is the only one to specifically mention electronic shelf labels as a potential method of “electronic surveillance technology,” which it says should not be an acceptable application of the digital tags. “There should be one price for one good for all people,” Democratic Assembly member Chris Ward said at a committee hearing this week.
Kohl’s began using digital price tags in 2013. Kroger first tested them in 2018. But it was Walmart’s announcement last year that it would roll out digital shelf labels to thousands of its stores, that got many shoppers, consumer groups and legislators concerned. Walmart said the digital price tags will reduce the need for employees “to walk around the store to change paper tags by hand,” giving them “more time to support customers in the store.” Critics worry it will become too easy to change prices on the fly, perhaps raising prices for popular items, displaying different prices to different shoppers, or even raising prices between the time you place an item in your cart and the time you pay for it at the register.
“This bill balances the desire for technological innovation against the danger of surge pricing by stipulating that food and other household goods would still need a physical price tag,” Rhode Island Lieutenant Governor Sabina Matos wrote in a letter of support for her state’s measure.
Her senior advisor David Folcarelli testified in favor of the bill, saying it’s important to act now, before electronic pricing labels become widespread. “We’re just slowing the ball down a little bit so we can understand what the effect of these electronic shelving labels will be on grocery prices,” he said. “It’s not an overreach, it doesn’t ask anybody to do anything that we haven’t asked for the last 50 years,” in requiring prices to be clearly and conspicuously labeled.
The bill is part of a legislative package that Matos is calling her “Fair Price Grocery Agenda.” That agenda includes four measures – the electronic shelf label bill, a bill that would ensure smaller grocers can get the same pricing from suppliers as their larger competitors, a bill that would make it easier to open new grocery stores in the state, and a proposal that’s already become a hot topic in several states – regulating how digital discounts are offered, to ensure that digitally-disengaged shoppers get access to the same deals as their digitally-connected counterparts.
Democratic state representative Tom Noret introduced that bill last month. It would require retailers to offer “alternative methods” for shoppers to access advertised digital coupon deals, if they don’t have the technology or the know-how to activate the digital deals themselves.
“All that this legislation will do is require a little bit of work on behalf of just a handful of retailers in Rhode Island,” Noret told the committee.
“There are existing industry solutions already in place for this,” countered Scott Bromberg, President and CEO of the Rhode Island Food Dealers Association. He pointed out that many Rhode Island retailers already offer in-store digital coupon kiosks, or they apply digital discounts upon request. “It would be our fear that if we come down too hard on digital couponing, it’ll just end up with less digital coupons in the state of Rhode Island,” he said, “which ultimately leads to less savings for all Rhode Islanders.”
The issue of coupons also came up during the hearing on the California proposal to ban “surveillance pricing.” A representative for the California Grocers Association testified that trying to mandate “one price for one good for all people” might make loyalty programs and personalized coupons illegal.
California’s bill has gone to another committee for further discussion. The Arizona proposal that would ban digital shelf tags has yet to be scheduled for a committee hearing. And all of Rhode Island’s measures remain under consideration.
“None of these alone are a silver bullet to fix grocery prices,” Matos said of her Fair Price Grocery Agenda. “But every dollar matters for young families, senior citizens, and every Rhode Islander who needs a break. We need to take action and pass these bills to give those Rhode Islanders fair grocery prices.”
Digital price tags and digital coupons are designed to be more efficient and less costly for all involved. But skeptics worry it’s the retailers who will ultimately profit. We may soon find out whether the marketplace, or the legislators, will ultimately be the ones to decide.
Image source: Walmart
