The growing debate over digital price tags

0:01The best proxy is if we think about how people were talking about AI six months to even a year ago and how people were using it in daily life, I think the same evolution is going to happen here, right? Where most people didn't have any subscription to any AI tools, let's say a year ago, and that's massively shifted to today. I think the same thing is going to be true with Agenda Commerce, where it's going to feel like nothing is changing and then all at once, it'll feel like it's been here all along. That's Juan Pellerano Rendon, Chief Marketing Officer at Swap, our sponsor on this episode of the Modern Retail Podcast.

0:41Later in the show, Custom Intelligence talks with Juan about the rise of agentic commerce, its education phase, and what retailers should keep in mind.

1:06Hello and welcome to the Modern Retail Podcast, a show about the ways the retail industry is changing and modernizing. I'm Special Projects Editor, Melissa Daniels. Today, we're digging into the debate around electronic shelf labels. My dad worked at a grocery store when I was growing up. One of the telltale signs was white and yellow shelf labels that he'd take out of his jacket pocket and put on the dining room table every night. It was evidence of the prices in stock that had changed out on shelves that day. But we're seeing something different in stores these days. Price tags are now on a little illuminated screen that can be digitally updated.

1:41These electronic shelf labels aren't necessarily new, but they're spreading fast, with companies like Walmart rolling them out across the entire store fleet. Kroger started replacing traditional paper shelf tags with electronic displays in August of last year. And they're getting a lot more attention from shoppers, retailers, and even lawmakers. Because for some shoppers and consumer advocates, these labels raise a bigger question. What happens when prices can change instantly? Critics worry it could open the door to retailers raising prices based on who's in the store and their own customer data.

2:16Others have concerns about how the technology can replace jobs. I wanted to hear from experts on both sides of the issue. First, we'll hear from Jason Strachecki at the National Retail Federation, which sees the labels as a helpful in-store technology. Then we'll hear from Edemola Oyefeso from the UFCW, which is spearheading a legislative effort to curb usage. He says profit-seeking retailers need guardrails around how data can be used for in-store pricing. But first, let's hear from Jason. I'm Jason Strzeczewski, Group Vice President of Government Relations and Political Affairs at the National Retail Federation.

2:56I wanted to speak with Tim, on behalf of the retailers NRF represents to hear how they're actually using this technology. Electronic shelf labels are exactly what they say they are. There's really no, there's no specialty to them. There's no, you know, technology around them that you would otherwise expect. I think we're all very familiar with electronic shelf labels and electronic price displays other places in society and in our modern life. For instance, when you go to the gas station, you can see the prices digitally displayed bright at night, you know, so you know what the price is before you pull in to pull up to the pump.

3:35When you go to the movie theater, you see digital price displays. When you go to certain restaurants, you might see a digital price display, including at the table where you can order on a little kiosk for your meal and with yourself and your family. And you can also see the prices digitally displayed online. So really, an electronic shelf label is the same sort of technology just put into the in-store shopping format. So if you think your grocery store where you see the little paper tags or the paper sticky labels, it's now being replaced in some instances with a plastic tag that has a digital representation of the exact same information that was on that paper sticker tag.

4:17and in some cases it's printed to look almost like it's a printed tag so that it looks similar to everything consumers have normally seen when they're shopping. Now we saw an announcement from Walmart that this year it's planning to make sure these shelf labels are in all of its fleet of stores. This is the continuation of a plan they announced a couple years ago, but that sort of has set off a whole bunch of discussion around the shelf labels and how they're used. I'd love to hear from your perspective, you know, why your retailer members are putting the shelf labels out, the kind of day-to-day benefits or efficiencies that they're getting out of them.

4:58Other than adding new technology, it really doesn't change much in the way of operations, other than making things more transparent, more efficient, and more accurate. If you think of the days of going in your larger grocery store and you see the price tags, either they're printed on a label that has to be applied to something, to the product itself or to the shelf itself, or you've seen paper tags or you've seen paper signs. If you think about the thousands of items a major national retailer sells today to the customer in-store, that's a lot of work to keep everything accurate and up-to-date and timely.

5:36And there are many laws that dictate ensuring that the price that a customer sees displayed or advertised matches what they are ultimately charged when they go through the checkout process. So the nice thing about electronic shelf labels is that is going to increase accuracy, it's going to increase efficiency, and it's going to increase transparency for the consumer. That way, the price that they see when they're selecting their item matches what they're ultimately charged when they're ready to checkout. It's also going to to make things easier for retail workers. Gone will be the days, hopefully, of having to print out by hand hundreds, if not thousands, of price stickers and then making sure that they are being accurately applied not only to the item and to the shelf location, but also to make sure that the UPC code and the other important customer information that's on those price labels is accurate and is put in the right place.

6:32This way, we will now have, the customer will now experience Digital tags, you know, a plastic static tag still looks similar, blends into kind of the look and feel and operations of the store that you're in. And it'll provide an accurate price that can be updated quickly at the push of a button. If you're in your local hardware store and you ask for how can I find the box nails, this technology would allow if they were just deployed in that store, the associate to look up quickly on their inventory device, usually, you know, an iPhone or another device in their hand. It'll tell them what aisle or what shelf it's located on.

7:09And yes, it can connect so that as soon as the associate brings the customer to the location, the tag may begin to flash. And it'll help zero in on finding that specific nail or that specific item that the customer asked about. Let's get into the why now of this discussion a little bit, if that's okay with you. We've got roughly a dozen states where lawmakers have introduced legislation that would either ban electronic shelf labels specifically or put some regulations and guardrails around what retailers are able to do with pricing based on consumer data. There's also a federal bill that's been proposed.

7:48Curious from your perspective, how you see these bills potentially affecting retailers and the brands who sell there? Great question. We're seeing a number of public policy proposals advance at the state level and one at the national level. There's definitely a large public debate going on that I think you and your listeners and everyone's aware of, and that's affordability and the cost of living in the United States. This is a concern that many Americans have had going back to the last election, and it continues to grow today. There's a lot of uncertainty in the world, both geopolitically, economically.

8:25and these bills seem to want to tap into that customer angst and exploit it to try to advance newer policy positions. There are already numerous laws that protect and disclose and require the transparency around how customer data is collected voluntarily, how it's used, how it's protected by businesses. There are numerous laws already on the books that prevent fraud against consumers, including deceptive practices. The Federal Trade Commission has laws and guidelines around what sellers can and can't say. You can't give fake discounts, you can't bait and switch, you can't charge junk fees, and you can't charge a higher price for one item during a buy one get one free promotion.

9:11Around 39 states also have laws against price gouging during states of emergency or natural disasters. There are numerous laws protecting customers data. There are laws protecting against deceptive practices. And we feel that this is sufficient to allow retailers to innovate and make the customer's life a little bit easier and the workers too. We're in a position where I think customers are hip to the fact that their data could theoretically be used against them, right? We're familiar with surge pricing through Uber or, you know, quote unquote, surveillance pricing online. And people sort of know these tricks now where if I open up a private browser, it doesn't know where I am and I can get that lower airfare and things like that.

9:52And I think the fear that people have with the electronic shelf labels is that retailers could use their data against them in hiking up prices that they could do very quickly with the click of a button versus putting a paper label on it, right? But what I'm hearing from you is that there's already laws on the books that prevent retailers from doing in-store price gouging. Yes, there are those laws are already on the books. And it's important to note here, Melissa, that retailers want to have the data that they have that their customers have shared with them. We want to make it work better for the customer.

10:26And that's the important point here. Retail is a highly competitive industry. Unlike the airlines, where there's only so many seats on every flight, or hotels where there's only so many room nights per night in a given location, retail is hyper-competitive. A lot of retailers sell on volume in order to keep prices low. So in retail, it's about being the lowest price on the street, not the most advantaged or finely tuned or highest price. And building customer trust is number one for retailers. That's why they're trying to help make sure that the data that customers choose to share with them is working for the customer.

11:06Without customer trust, if you're known as the business on Main Street or any street that is the highest price in town, you're probably not going to be in business very long in the retail industry. So it's hyper-competitive. There's a great product assortment out there. Customers have a lot of choices in what they buy and where they shop and how they shop. And it's not like the other industries that you mentioned that may have deployed dynamic pricing or using surveillance technology and methods to try to deliver a real-time price for a real-time scenario. That's just not applicable in retail.

11:44Retail is about providing discounts and value to the customer that wants it and to try and be competitive. NRF is saying we don't need laws preventing companies from spiking up prices in store because we already have them. But we have seen instances where companies have used customers' data to adjust pricing. In December, Instacart rolled back its experiments that used AI to enable algorithmic pricing, based on an investigation from Consumer Reports and Groundwork Collaborative. And as we talked about with Jason, algorithmic pricing isn't necessarily new. But some consumer and labor advocates say retailers need guardrails to avoid surveillance pricing in store.

12:25That's after the break.

12:39I'm Christina Ko, Senior Editor at Custom Intelligence. Digiday Media's and Modern Retail's in-house agency. In this podcast, Interstitial Story, sponsored by Swap, we speak with Juan Pelerano Rendon, Swap's chief marketing officer, about the rise of agentic commerce, its education phase, and what retailers should keep in mind. I certainly think that there are misconceptions and misunderstandings at this point. And this is a new way for commerce to transact agent to agent or with customers using agents. And that's fundamentally different from just a chatbot making recommendations, right? Or the ability to virtually try on.

13:19This is a fully new and innovative way to transact. And I think we're in a bit of a chicken or egg situation where we don't know if it will be the brands that drive the transition by forcing consumers to adopt, bringing the innovation to the consumers, or if the consumers will start to demand these types of tools and make it so that the brands have to adopt them because they just want to transact in this way and use agents. So it will fundamentally shift, in my view, this year, where consumers are already using LLMs all the time in terms of how they work, questions that they ask personally and professionally.

14:05So it's only right that the next thing that will come is in terms of commerce. So will consumers be the ones that want that experience from the retailers or will the retailers bring the innovation to those consumers? We're working on the latter, but hope that consumers will also help drive that innovation and change by having that expectation from the brands and retailers to bring these experiences to life. While agentic commerce has been a hot topic, consumers need to understand how the technology benefits them before they can be active proponents. Until now, agentic commerce, I think it's been a lot of noise and consumers are probably tired of hearing that there's going to be this big change and it's going to make shopping and consuming a lot easier.

14:53But now once they start to see the utility of Agenda Commerce, they're using LLMs in their daily lives. Once it comes to commerce and how you transact, it's going to be exponential adoption overnight because they realize you can have guided discovery, guided shopping experience and really blur the line as close as you can between physical in-store and digital and e-commerce. where you can have one-to-one experiences with the agentic sites and ask questions, ask for recommendations, virtually try things on, and then transact very simply through voice or text in the way that you would in-store. So if you're able to blur those lines between online and physical retail, certainly consumers are going to adopt it and want to have that experience more and more.

15:44As consumers realize the benefits of agentic commerce, Retailers will need to figure out how they can deliver solutions that make sense for them while offering consumers what they're looking for. I think retailers are starting to educate themselves and honestly looking for answers in terms of what's the best way to enable agentic commerce. That's what we're working on right now and have a lot of brands beta testing with us to enable true end to end agentic commerce. So as these things become more widely available, then brands and retailers, I think, will start to act a lot quicker. Tariff with flash, supply chain issues, that's been kind of where everyone's minds have been.

16:28I think as the conversation has shifted in Q1 to be more focused on Agenda Commerce more broadly, you're seeing a lot of retailers roll out their own Agenda Commerce solutions that are built in-house. So as these things get brought to light more and more, there will be more options for retailers in which they're able to better decide what makes most sense for them. But until retailers feel like they're educated enough on what's out there, I don't think there's going to be a ton of movement in terms of enablement. And being in the education phase of the industry at large and as consumers adopt it and as brands adopt it and solutions come to market, I think it'll be something that really fundamentally shifts as we go into Q2 and Q3 of this year.

17:17You've been listening to Juan Pellerano Rendon, Chief Marketing Officer at Swap, our sponsor on this episode. And now back to the Modern Retail Podcast.

17:33I spoke with Ademola Oyefeso from United Food and Commercial Workers, better known as UFCW. That's a labor union with 1.2 million members in North America, including people who work at grocery stores. When these first started rolling out into stores, what was the response from workers? Because one of the arguments I hear in favor of seeing these become more common is that, hey, it's one less job to do during the day. You said it right there. You know, when these first rolled out, people were like, oh, it's making things easier. That's it. But you said it's one less job to do. You know, the question's always framed in a way where people like, oh, yeah, it'll make your job easier, but one less job.

18:20That means if you were to truly ask workers, do you want your job or you want to do an uncomfortable job? They'll tell you, I want to do my uncomfortable job. I need a job. I need to make a living. Some data suggests a majority of American shoppers are wary of how companies can use their data against them. In February, Talker Research released a survey that found 6 in 10 Americans are either somewhat or very concerned about the prospect of personalized pricing. The union earlier this year started a state legislative campaign to ban electronic shelf labels or otherwise limit the ways that retailers can use consumer data to affect pricing.

18:57They are also pushing a federal bill that would ban corporations from leveraging new technologies to increase grocery prices for Americans. This is a national campaign, so it started out, there's a federal bill in D.C., you know, in the partisan moment right now, it's introduced, it's gaining sponsors, But as federal bills go, it's the long game. In states, we've been fortunate that this is a real big issue that we've been able to introduce it in. Blue states and red states, we've had it introduced in Tennessee, Oklahoma, Georgia. It's in Arizona. It's also in New York, New Jersey, Delaware, Maryland, Illinois.

19:37And we're working to get it introduced further. The problem you have is state legislative sessions vary in length of time. So this is our coming out year and we'll still be moving it next year. And it's moving in, I'd say three or four states really have some good momentum behind them. I, you know, knock on wood, I'm not making any promises, but, you know, we're going to try and pass it in as many places as possible in shape or form. The states that are really looking good are New York, New Jersey, Maryland, and Illinois. And, you know, we'll see how that goes through their legislative sessions.

20:17There has been a couple hearings on this. You know, I'm curious some of your takeaways from the discussions that lawmakers are having. You know, what are some of the arguments that you feel like are coming out in support of this? And what's some of the more common pushback that you're hearing as well? The arguments that come out in support of it are simple. It's about affordability. When you look at SNAP recipients, food stamps, as it's commonly known, these are people on fixed incomes. You plan your budget. If you get$150 in SNAP, you know what that$150 got you last week and you needed to get it to get the same next week.

20:57But this technology, you know, you can tell a Snap recipient, hey, be wary of Instacart because it's already been proven. Instacart might up the price. But you go to the grocery store, you know the price of what you see is the price of what you get. It might change one cent week to next, but you know it's not going to change day to day. Now this same person has to figure out what day of the week do I go to make sure I can get the most out of$150. So, you know, Snap Advocates have pointed that out. They've also pointed out the fact that this technology is using all the information that they have on me.

21:35You know, and it's not just, you know, the camera is one thing. You know, there's the camera, but there's the, I use the Wi-Fi in the store, they're collecting that data. I use my credit card, they're collecting that data. And then they can change the prices on me. Consumers are at a disadvantage. And those messages resonate a lot with elected officials and they get it. How would you define dynamic pricing in terms of how it's used by the industry today? Dynamic pricing is using data and information you have on your consumers to determine the most they will pay for a certain product and or service.

22:18That's what dynamic pricing, nothing dynamic about it. It's just how do I use all the information I've collected to get people to pay just a little bit more for the same thing? I was offering them for a lot less. And this is something that people might be familiar with from what, like, you know, airline travel, hotels, right? Uber. If one of your listeners take Uber, they have seen it when they come out of a concert and they want to go home. And all of a sudden, it only cost me$30 to get from my house to the concert. But now I want to go back and it's$130. I'm going the same distance, but Uber says it's dynamic pricing.

22:58You know, I want and I love the excuse of, well, we want to make sure drivers want to take you back. The driver that took me there will want to take me back home for the same price. And most of the times, the drivers aren't the ones getting the extra$100. The company is. And that'll be the same thing with these grocery stores. They'll say, we're doing it for the customer and our workers. But the workers will never see the extra price charge. And the consumers will always be paying more overall. They might get a dollar discount, but at the end of the month, they paid$20 more for that dollar discount in dynamic pricing.

23:38One of the other arguments on the pricing front that we hear from retailers is that, you know, there's already truth in advertising laws. There's already laws against price gouging. We're already abiding by that. And this is just a way for us to, you know, make it easier to update our prices when we're going to. What's your response to that? They are absolutely right. There are any laws around price gouging, but it still happens. And what they are trying to do is not price gouging in the ugly sense of the word. You know, we all look at price gouging of, hey, there's a hurricane coming. I mean, there's a snowstorm coming and the local hardware store sent shovels from$12 to$50.

24:25That's the obvious sense of price gouging that we all know that any elected or law enforcement official say they can point to. What these guys are trying to do is so much more insidious. They're looking at it and saying, well, I'm not price gouging. I'm just getting to exactly what you will pay. And I'm not doing it, but, you know, some will say I'm not doing it because of the weather, because I'd get in trouble for doing it for the weather. I'm just doing it because my grocery store is right here and it is in, you know, 90210 zip code and I can charge a little bit more for these. I can go from$199 to$399 on Thursdays because all the moms leave school, drop their kids off, and are leaving to go to wherever it is they're going.

25:17And they're charging more because of that specific time, that specific day. And it's not price gouging in the sense of the big bad. It's price gouging in the sense of you, there is an agreement between retailers and consumers that I know I'm going to pay the same for this as you are. And that's the agreement. Now they're saying it's not price gouging if we throw away that agreement and Adamola pays 30 cents more because we know Black men are buying this. And you pay 20 cents less on these products because we know white women aren't buying that. Now it's this thing of, well, you live in Brooklyn.

25:59I live in Manhattan. They're charging me a different price. You're a man. I'm a woman. You buy this product every week. So I don't. So now you get charged more while they never bother charging me more because they're like, oh, they're surprised I bought it anyway. So where's the trust in that? You know, where's the consumer love when two consumers walk into a store, buy the same product, but one pays more for it than the other? What I'm hearing is so much of this is coming from the data that companies have on their shopper, right? And, you know, in your opinion, do the existing laws account for that?