What to know about dynamic grocery pricing and how it might affect your bill

Grocery prices remain a big concern for Americans — and not just for families looking to stretch their dollars to cover increasing costs. Economists, consumer advocates and legislators, too, are focusing on them, with concerns that companies will take advantage of technological advances and a confusing landscape to charge consumers more.

Dynamic and personalized pricing have been in the news, with legislation aimed at stopping retailers, especially grocery stores, from shifting prices unfairly. Here’s what you need to know.

What is dynamic pricing?

Dynamic pricing is a term used to describe the way companies adjust their prices in real time to account for factors such as supply and demand, sell-by dates and competitors’ prices.

In grocery stores, prices have traditionally gone up and down — particularly for items such as produce, dairy, meat and poultry — based on fluctuating prices that grocers pay for them. Any store might raise its prices, either across the board or for certain products, if its costs for things like labor or rent go up, or it might lower them for sales or to attract customers.

But the term “dynamic pricing” has only recently become a hot topic, and the phrase is used in different ways. Some grocers use it to mean offering discounts in real time, such as on food that’s nearing its sell-by date.

“Dynamic pricing unfortunately has been deemed a bad activity — it means you’re only raising the price on me,” said Doug Baker, the vice president for industry relations for FMI, the association that represents large grocery chains. “When in the grocery industry, nine times out of 10, dynamic pricing means I have the ability to dynamically change through my day to lower a price.”

Others make a distinction between that use and changing prices for other reasons, such as high demand or the weather. To some, dynamic pricing is any change made in real time based on an algorithm, which can also be referred to as “algorithmic pricing.”

Personalized pricing, or what some refer to as surveillance pricing, is when a retailer uses information about a particular shopper, gleaned from a number of sources and often purchased from data brokers, to set a price that is different from what other customers are charged for the same items.

Ben Winters, director of AI and privacy at the Consumer Federation of America, said companies can use a person’s purchase history, location or browsing history to calculate how much they can charge. “There are all these things that try to determine a given person’s demographic, or a given person’s predilection for buying something, and how much they would be willing to pay for it,” Winters said.

How are grocery stores using it now?

It depends on the definition. Baker said many stores use dynamic pricing, but only to lower prices for items that are nearing their sell-by dates or that they want to move.

“If it’s a box of cereal and it’s going to go out of code in three days … I might need to reduce my price so I can make sure that it moves through, so we’re not creating more food waste,” he said.

Prices might fluctuate for other reasons, too. A change in the cost to the grocer is the most common, and that can be because the manufacturer is raising prices due to inflation, higher gas prices or increased labor costs.

Seeing widely different prices from one store to another for the same item isn’t uncommon. One store could have received a better deal from the manufacturer, purchased it at a different time or decided to discount it.

The National Grocers Association, which includes smaller and independent stores, said they are not using dynamic pricing at all, meaning they don’t change prices based on other external factors.

“Our members’ prices are just based on cost,” said Stephanie Johnson, the NGA’s head of government affairs, “and then sometimes they’re able to give you a discount because you know they got a good deal on something, so they’re able to pass that on, but they’re never changing the prices based on data and algorithmic criteria.”

Grocers say that implementing personalized pricing for in-store shopping would be all but impossible, noting that multiple shoppers could be standing in front of the same item, making it difficult to create an individualized price.

Kroger said it stopped a 2019 pilot program with Microsoft in which it used cameras and facial recognition tools to identify shoppers. Wegmans uses facial recognition technology, but it has said that the images are used for security, not pricing.

An Instacart representative said the platform does not use dynamic or personalized pricing for items, though it does offer coupons or discounts based on consumers’ behavior. Fees for delivery, however, are dynamic and depend on things like how many delivery people are available or how far your home is from a store.

What about those digital price displays?

In some stores around the country, digital displays have taken the place of traditional printed-out bar codes and prices shown below products on shelves. The screens allow grocers to easily change prices without having to print out new labels and affix them by hand. They are increasingly common not just in major chains but smaller outlets, too. Walmart has said that it will have digital displays in all of its stores by the end of this year.

However, the presence of digital displays does not mean that a store is raising prices based on who is shopping or factors like time of day or demand. Grocers say they’re simply a more convenient way of doing what they already do, and many in the industry worry that customers have conflated the mere presence of digital labels with nefarious practices.

Consumer advocates, though, and some lawmakers suspect that if grocery stores can more easily change their prices, they ultimately will — and potentially in an unfair way. Some have called it a gateway to uneven pricing. “Electronic shelf labels are a reality, there’s no question about that,” said Phil Lempert, a radio host and consumer analyst known as the Supermarket Guru. “Every supermarket is going to have them. The question is whether or not we can put enough guardrails there that it’s just used for honest pricing and not surge pricing or surveillance pricing.”

What will the future of dynamic pricing look like?

Whether dynamic or personalized pricing systems become the norm in grocery shopping remains to be seen. Consumers have come to expect widely differing prices on things they purchase online, like airline and concert tickets.

But many people, including consumer advocates, say such variability is confusing and time-consuming. Hunting for a deal might be less of a hassle for something that people might consider a luxury or a one-off purchase. But groceries are a necessity.

“There are places where consumers have gotten habituated to these tactics,” said Grace Gedye, a policy analyst at Consumer Reports. “But that doesn’t necessarily mean that consumers like them, or would be happy to see them proliferate.”

Could dynamic pricing be good for grocery shoppers?

Grocers say technological advances, including apps and digital displays, allow them to offer discounts more easily. Stores can knock down the prices on perishable items with a few keystrokes, they say. And AI-boosted loyalty programs, in which retailers know a shopper’s history and demographics, allow them to target coupons and sales, which is a form of personalized pricing.

“If you think about that hyper-personalization, some people go, ‘That’s a little bit creepy, you know way too much about me,’” Baker said. “But the alternative is, is that you get just a vanilla offering, right? That’s a waste of your time.”

John Zhang, a professor of marketing at the University of Pennsylvania’s Wharton School, said dynamic pricing helped democratize air travel by making it more affordable, and that it could do the same in other sectors, which he described as inevitable. “I’m confident of the fact that dynamic pricing will intensify price competition, even in the retail industry,” he said. “And ultimately, that the right people will benefit from the dynamic pricing, which means the people really at lower rungs of society that cannot afford to pay a lot.”

Some economists, though, warn that algorithmic pricing can inflate prices. A recent study by a University of Virginia economist found that when companies know their competitors are monitoring prices to match theirs in real time, there is less incentive to compete on price, a concept called “algorithmic coercion.”

What legislative efforts are underway?

Last week, the New York legislature passed a bill banning personalized or surveillance pricing, after the state in 2025 adopted a law requiring companies to disclose such pricing schemes to consumers. In April, Maryland specifically banned grocery stores and delivery services from using customers’ personal data to set prices. That law goes into effect in October.

Other states are considering similar bills, including New York, Connecticut and Colorado. And in several states, laws have been advanced that ban digital shelf labels altogether.

What can customers do about dynamic pricing?

Consumer advocates say that shoppers should stay aware — both of the prices they are paying and the actions of their state and federal legislators.

Generally, shopping in-store rather than online or through delivery apps is one way to ensure that you’re getting the best price, consumer advocates say. And when using third-party delivery services, look out for markups. On Instacart, for example, you can sort stores so that you’re only shopping from retailers that don’t charge higher prices there than in their aisles.

Shoppers are already facing a landscape that is ever more difficult to navigate. With grocery prices up across the board, many people are shopping more deliberately, including seeking out sales and visiting multiple stores.

“I might go to Costco for paper goods, paper towels, and to Gelson’s for meat,” Lempert said. “Which gets me the best prices — but it’s very exhausting. There’s no question about that.”