Abstract

The adoption of electronic shelf labels (ESLs)—digital tags enabling instantaneous price updates—by Walmart and Kroger has triggered regulatory scrutiny at both federal and state levels. Policymakers are concerned that ESLs have facilitated surge pricing strategies, whereby retailers increase prices in response to factors such as time of day, weather conditions, or demand spikes. We examine these concerns with comprehensive transaction data from a US grocery retailer with $3 billion in annual revenue, which gradually implemented ESLs across over 100 stores beginning in September 2022. We find virtually no surge pricing either before or after ESL adoption. Specifically, temporary price increases (surges) affected only about 0.0042% of products on an average store–date before ESL adoption, and this rate changed insignificantly by +0.0006 percentage points (p-value 0.90) after adoption. Further, using the NielsenIQ scanner data, we demonstrate that our focal retailer’s price-change and price-growth rates are indistinguishable from those of other grocery retailers operating in the same states, before, during, and after the ESL rollout.

To attend the seminar, please contact us at dip.mkt@unibocconi.it