The use of technology to target consumers is old hat by now for most folks. We're used to getting personally-tailored ads on the Internet, on our smartphones or on social media. We've also become accustomed to dynamic or "surge" pricing in certain industries, like ridesharing, air travel, and concert tickets. (Wendy's denied reports earlier this year it was bringing surge pricing to fast food.) But the latest wave in retail is "personal pricing." Also called "surveillance pricing," this is the use of artificial intelligence (AI) to analyze consumer data and set a specific price based on the individual consumer.
Surveillance pricing is no secret. In fact, major companies are bragging about offering it to businesses. That prompted an investigation by the Federal Trade Commission (FTC), which is looking into these companies (including Mastercard and JPMorgan Chase). FTC Chair Lina Khan says the agency is concerned "firms could be exploiting...personal information to charge people higher prices," adding the FTC probe "will shed light on this shadowy ecosystem of pricing middlemen."
While no individual retailers are using personal pricing yet, some appear to at least be setting up the ability to do so. Walmart recently announced it is switching to digital price readers at all of its stores over the next few years. Kurt Knutsson at CyberGuy.com explained how this works. "These electronic devices are small, battery-powered screens that can wirelessly jack up or reduce prices of items on store shelves in an instant," he says.
For its part, Walmart says it has no intention of introducing dynamic pricing at this time. But with other stores also rolling out similar technology, at the very least, this gives shoppers something new to think about. "These stores will now have even more incentive to fluctuate prices, which can now change multiple times a day with these devices," says Knutsson. "Is that good news? I'm not so sure."
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