Kroger, the largest supermarket chain in the U.S., is facing criticism from Democrats over its current integration and potential future use of new technologies, including digital price tags and facial recognition that lawmakers say could lead to discriminatory price gouging at a time when grocery prices are at record highs.
Last week, Rep. Rashida Tlaib sent a letter to Kroger expressing concerns about the company’s use of technology and its potential for discriminatory price gouging.
Families are struggling to put food on the table. I sent a letter to @Kroger about their decision to roll out surge pricing using facial recognition technology. Facial recognition technology is often discriminatory and shouldn’t be used in grocery stores to price gouge residents. pic.twitter.com/KwvQB8dfwK
— Congresswoman Rashida Tlaib (@RepRashida) October 15, 2024
In her letter, Tlaib, a progressive Democrat who represents Michigan’s 12th District, said that “[Electronic Shelving Labels] ESLs or digital price tags may result in Kroger deploying dynamic pricing for goods, increasing the price of essential goods on shelves based on real time conditions and inventory and creating both confusion and hardship for my residents.”
Kroger has 120 grocery stores across 82 cities in Michigan.
In 2018, Kroger rolled out ESLs to several stores as part of a pilot, and in 2023 expanded their use under the name Kroger EDGE to 500 of its stores nationwide.
ESLs, unlike paper price tags, allow the grocer to adjust prices dynamically, similar to how Uber and other rideshare services price fares depending on factors like time of day and demand. The ESLs can also display advertisements, nutritional information and coupons.
A spokesperson for Kroger told Newsweek that “prices usually change when a new ad breaks,” which is typically when digital coupons are released on Wednesdays.
Electronic shelf labels (ESLs), like the ones seen here, are facing blowback from U.S. lawmakers concerned that grocery stores could use them to price gouge.
Business Wire via AP
In January 2019, Microsoft and Kroger entered a partnership piloting ESLs with Microsoft Azure and artificial intelligence technology, as noted in a press release at the time.
Kroger told Newsweek that the pilot is no longer active and the grocer is “not working with Microsoft on EDGE/ESL.” Newsweek has reached out to Microsoft for additional information about the partnership and pilot program via email on Wednesday.
Tlaib isn’t the first member of Congress to raise concerns to Kroger. In August 2023, Senators Elizabeth Warren and Bob Casey Jr. wrote a letter to the grocery chain demanding further information and raising concerns about dynamic pricing leading to price gouging, saying that ESLs “introduce the potential for grocery giants to abuse their power and surge grocery prices, raising prices suddenly and at times when certain products are in highest demand.”
In addition to price gouging, the lawmakers have also expressed concerns about data privacy issues and discrimination related to ESLs. In their letter, the Sens. Casey and Warren noted that Kroger’s plans to implement facial recognition technology in store, as a way of collecting information about shoppers that the company said it would use to personalize offers.
In response to questions about the status of the company’s facial recognition technology, Kroger said it had “no facial recognition program with Microsoft,” and noted that the ESL pilot program “did not include facial recognition.”
Tlaib wrote in her letter, “Kroger is intending to place cameras at its digital displays, using facial recognition technology to determine gender and age of customers captured on camera to present targeted advertisements to display on ESLs. Studies have shown that facial recognition technology is flawed and can lead to discrimination in predominantly Black and brown communities.”
Tlaib continued, “my concern is that these tools will be abused in the pursuit of profit, surging prices on essential goods in areas with fewer and fewer grocery stores.”
Shoppers are seen in a Kroger supermarket on October 14, 2022, in Atlanta, Georgia. On Friday, Representative Rashida Tlaib wrote a letter to Kroger raising concerns about its technology uses and potential price gouging.
ELIJAH NOUVELAGE/AFP via Getty Images
In response to Tlaib’s letter, Kroger said its business model is “built on a foundation of lowering prices to attract more customers. 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 statement continued: “To be clear, Kroger does not and has never engaged in ‘surge pricing.’ Any test of electronic shelf tags is designed to lower prices for more customers where it matters most. To suggest otherwise is not true.”
Food prices have been rising in recent years, even as inflation has cooled. The Department of Agriculture reported that average annual food prices were 5 percent higher in 2023 than in 2022. The USDA also noted that the 20-year historical average for food price inflation is about 2.5 percent per year, slightly above the Fed’s 2 percent inflation target.
