Shownotes
This Omni Talk Retail Fast Five segment breaks down New Jersey's proposed legislation targeting AI-powered pricing and placing a moratorium on new electronic shelf label installations.
Chris Walton and Ben Miller discuss why electronic shelf labels have become caught in the AI pricing debate, how Europe embraced the technology through consumer protection initiatives, and why intelligent pricing and surveillance pricing are two very different conversations. They also explain why electronic shelf labels remain one of the most important technologies available to grocery retailers.
Tune in for the full episode here: https://youtu.be/-pwAnA4c7Co
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Transcripts
New Jersey has passed a bipartisan Fair Price Protection act which would ban grocery stores and third party delivery platforms from using AI or so called consumer surveillance data to charge shoppers different prices for the same items.
Speaker A:And it also also imposes a one year moratorium on new electronic shelf edge label installations.
Speaker A:So according to Progressive Grocer, the bill now sits on Governor Mickey Sherrell's desk and I hope I pronounced her name correctly.
Speaker B:I think you did, yeah.
Speaker A:Amazing.
Speaker A:She was previously called surveillance pricing outrageous and is expected to sign the bill.
Speaker A:The law bans pricing that varies based on biometric monitoring, genetic information or or protected class data, but carves out exceptions for loyalty programs and clearly disclose group discounts such as teachers, seniors, vets, et cetera.
Speaker A:Retailers that already have ESLs installed can keep using them during the one year moratorium while the state studies their link to so called surveillance pricing.
Speaker A:The nga, the National Grocers association has pushed back arguing that independent grocers do not use algorithmic or surge pricing models and cause ESL sells simply a modern replacement for paper price tags.
Speaker A:Chris, this is the A and M put you on the spot question for this week.
Speaker A:Okay, okay, okay, here we go.
Speaker A:Now that lawmakers are involved in the AI pricing debate to the point where it's affecting retail efficiency levers like ESLs, where do you side under debate?
Speaker A:Pro freedom of pricing flexibility for grocery retailers or pro protection for the consumer against it?
Speaker B:Oh, man.
Speaker B:I don't know if I'll take up the dichotomy there, but you know, I think that this announcement's really important.
Speaker B:And the first half of what you read, I'm fine with like biometric monitoring genetic information.
Speaker B:Like nobody should be using genetic information to price anything.
Speaker B:You know, like that's just, that's, that's a fine line that I don't think anyone wants to go down.
Speaker B:So all that jazz, 100%, I'm good with it because.
Speaker B:And the other thing too is that's really an online proposition.
Speaker B:You're doing that in an online game.
Speaker B:You know, you're not doing that in store pricing.
Speaker B:Store pricing doesn't work that way.
Speaker B:The mechanics of it are too complicated.
Speaker B:So what I'm really resolutely against, resolutely against is conflating electronic shelf labels with all that activity because it just doesn't happen inside of a retail organization.
Speaker B:No grocer in their right mind, in their right mind is going to change prices, change prices on shelves while consumers are shopping the aisles.
Speaker B:The fallout from that type of activity would be absolutely Insane.
Speaker B:And to think that shows just how much to even consider that shows just how much politics and the unions are involved in this discussion.
Speaker B:And the moratorium on electronic shelf labels makes me sad because it is what I have said over and over again for the past nine years since creating Omnitalk.
Speaker B:It to me is the number one technology that helps grocers compete with Amazon.
Speaker B:The benefits are so multifold.
Speaker B:You've got labor savings, you've got pick to like capabilities.
Speaker B:But most importantly, and I'll say this, till the cows come home, you get marked to market pricing.
Speaker B:So how do the state representatives think grocers are going to compete with Amazon when Amazon can change their prices anytime they want to.
Speaker B:But whether or not they're doing surveillance pricing or not, they can still change them whenever they want to while grocers are left running print jobs that take weeks and weeks to execute.
Speaker B:So the, the arguments posited to me, Ben, are just downright ridiculous.
Speaker B:But what's your take?
Speaker A:Yeah, Europe.
Speaker B:Europe.
Speaker B:Europe said you've had, you've had ESLs forever, you know, and, and you, and Europe is far more pro labor than the United States is too.
Speaker B:So there's, there's this interesting like what the heck is going on here with this legislation?
Speaker B:To me.
Speaker A:Yeah, and I think that, I think there's an irony there, Chris.
Speaker A:You know, do you know it was actually consumer protection legislation that drove the adoption of ESLs in Europe?
Speaker A:No way.
Speaker B:Really?
Speaker A:France?
Speaker B:Great context, Ben, great context because France.
Speaker A:Has some of the strongest legislation around pricing regularities with genuine meaningful fines.
Speaker A:If you've got a difference between your on shelf price and what's actually charged at till and it comes complete with frequent inspections and a rigorous enforcement environment.
Speaker A:Put those together, that created the environment where the business case for ESLs that is to ensure consistent pricing was tipped and it became more important for French grocers to put it in than the risk of fines.
Speaker A:So, so that's what drove the development.
Speaker A:And so many ESL technologies were built out of France.
Speaker A:And that's why Chris, so this goes to the heart of the story for me.
Speaker A:Is this consumer protection legislation or is this a labor protection legislation?
Speaker A:And if it's the latter, I mean there is clearly an irony in that knowing how much in store teams hate having to manually change production price labels.
Speaker A:But I think, look, two elements.
Speaker A:Firstly, should retailers and especially grocers be using dynamic pricing?
Speaker A:And secondly, the case for legislation.
Speaker A:Look Chris, I'm not going to go into the latter genuinely.
Speaker A:It's not my place to comment on the legislation that the good people of New Jersey want to enact.
Speaker A:But I totally agree the moratorium on ESL rollout is, it's a challenging precedent for retailers across the US who are battling to find appropriate efficiency savings.
Speaker A:And I hope other retailers are listening, are paying attention and engaging with their representatives accordingly on this topic.
Speaker A:Really important.
Speaker B:Yeah, that is really excellent context, Ben, which is why it's so great having you on the show because you provide the context of like, hey, we've been down this road before.
Speaker B:There are right and wrong answers to these questions.
Speaker B:When you look at them and you look at all the facts that are, that can be presented and you know, the France case is a great one to look at in terms of what's going on and what are you, what is the problem you're really trying to solve?
Speaker B:If you're trying to solve dynamic pricing, solve dynamic pricing, but don't make electronic shelf labels the calling card for that issue because it's really a separate, it's really a separate topic for the most part.
Speaker A:You know what, Chris?
Speaker A:My concern in bringing them together is, is it we potentially don't get the grown up conversation that we should be having about dynamic pricing.
Speaker B:Right.
Speaker A:Yeah.
Speaker A:Look, consumers are, they used to paying more when things get scarce.
Speaker A:So if I was in Miami this weekend and I wanted to try and get a ticket to see England play Norway, I understand that's going to cost me more because of scarcity.
Speaker A:I understand the last seat on a flight will cost more than if a plane's half empty because it's finite.
Speaker A:I might not love it, but I get it.
Speaker A:There is absolutely no parallel to that in grocery retailing.
Speaker B:No, not at shelf.
Speaker B:Right?
Speaker B:Not at shelf.
Speaker B:No, we do, we do.
Speaker A:We do an incredible job as an industry to avoid scarcity.
Speaker A:You know, our stores frequently run with on shelf availability in the high 90s, you know, percent.
Speaker A:There is no last seat in the stadium equivalent.
Speaker A:But if legislation, so look, legislation that wants to prevent charging individuals different prices for food at the same store in the same time.
Speaker A:I mean even the prospect of doing that is so ethically wrong the retailer would touch it with a barge pole.
Speaker A:And no, that's, that, that's, that's fine.
Speaker A:But what will be, will be shame.
Speaker A:Chris, I'd love to hear your views on this.
Speaker A:Is if there's such a, if there was such a backlash that it prevented retailers from using intelligent pricing for commercial or shopper advantage.
Speaker A:Look, what, what I mean, I, I don't have a problem if a grocer reduces the price of a product in certain stores in its portfolio because a competitor in catchments where it's overlapping has got some competitive activity and AI and shellfish labels is how you do that.
Speaker A:I don't have a problem if a grocer wants to run some live A B tests across a couple of different stores in his portfolio to understand what the optimum markdown price versus full price is.
Speaker A:So it sells through, minimizes food waste.
Speaker A:And again, you can only do that with AI and ESLs in a physical store environment.
Speaker A:So limiting the ability to do some of these smart things, I feel that's a shame.
Speaker A:But I'd love to hear your take on that.
Speaker B:No, I 100% agree with you.
Speaker B:I mean, and that's what's going to keep grocers profitable in the long run.
Speaker B:And continuing to staff, you know, up and employ people in their local communities is having the ability and the triggers to do that.
Speaker B:But the key point you're making, Ben, I think if we step back from all of it is like you have to think about how this works in practice.
Speaker B:No grocer, like I said before, no grocer is going to change the price when I'm standing in the aisle versus when you're standing in the aisle.
Speaker B:Because the social media videos for that one would be insane.
Speaker B:Like no one is going to do that.
Speaker B:And no grocer is probably even going to change anything in the store during the day unless it's like a dramatic promotion where everyone gets the benefit of that promotion.
Speaker B:That's the only way this is going to happen.
Speaker B:Otherwise price is going to change overnight.
Speaker B:They're going to update overnight just like they always do.
Speaker B:Just like when they always put signs out, it's not going to be any different.
Speaker B:And so that's why this is so misguided.
Speaker B:If you actually get to the actual operations of how retailing is done, you know, so that I don't know, but let's keep rolling.
Speaker B:It's great discussion.
Speaker B:I love the context that you brought in from the Europe, Europe side too because like, yeah, you, what you actually want is to make sure people are getting the right prices too.
Speaker B:Right.
Speaker B:Which also ESLs help with.