AI-Powered Dynamic Pricing Stirs Consumer Concern in U.S. Retail

Retailers are increasingly using artificial-intelligence tools to set or recommend prices. “Dynamic pricing” adjusts prices in response to market conditions such as supply, demand, or competitor rates. Digital shelf-label displays, long common in Europe and Asia, are now being installed in U.S. chains like Walmart and Whole Foods, enabling rapid price updates without paper tags. The technology can also support “personalized” or “surveillance” pricing, where individual shopper data—location, browsing habits, or income—might influence the price shown.

Associated Press

A 2025 study by web-data firm Decodo found that about half of the price changes it tracked across electronics, clothing, and home-improvement items were decreases, challenging the assumption that algorithms only raise prices. Researchers at an unnamed grocery chain reported “virtually no surge pricing” after digital labels were introduced. A survey by consulting firm Simon-Kucher of more than 2,200 business leaders in 28 countries reported that 41 % use AI software for market intelligence and 28 % employ it for “real-time price optimization.” An FTC staff report released in January 2025 identified at least 250 clients—spanning grocery and apparel retailers—using intermediaries that provide tools to tailor prices and promotions.

Associated Press

Walmart’s chief executive John Furner said the company’s digital tags are intended to keep prices current and reduce labor, emphasizing that “we price the product, not the person.” Target agreed to a $5 million settlement that bars the use of geofencing technology to raise prices, asserting the feature was meant only to provide accurate, store-specific pricing and not to personalize costs. The Federal Trade Commission has issued a proposed enforcement policy warning that nondisclosure of personal-data-driven pricing could breach consumer-protection law, while state legislators in Maryland, New Jersey, and Connecticut have enacted restrictions on using shopper data for price determination.

Associated Press

Consumers express anxiety that algorithms could give companies “power” over shoppers, a sentiment captured by Katie Thomas of Kearney: “There are major tensions happening right now between who’s really going to have the power with some of these algorithms and usage of bots and AI: the companies or the shopper.” Labor unions and consumer-advocacy groups have warned that digital labels could eventually enable surge or personalized pricing, even though current evidence shows such practices remain rare in grocery and general-merchandise settings.

Associated Press

• “There are major tensions happening right now between who’s really going to have the power with some of these algorithms and usage of bots and AI: the companies or the shopper,” — Katie Thomas, Kearney

Associated Press

• “We price the product, not the person,” — John Furner, Walmart CEO

Associated Press

• “Changing prices throughout the day, the way airlines or rideshare apps do, is exceedingly rare in grocery and general merchandise today,” — Asa Farquhar, Relex Solutions

Associated Press