Debunking the Myth of Walmart Surge Pricing

A recent piece at caught my attention for some hysteria over alleged surge pricing coming to Walmart.

Walmart is switching to electronic price tags that “allow employees to change prices as often as every ten seconds”. No one wants this!! No one wants surge pricing on ice cream and price increases on items already in your cart.

Jason, calm yourself. This isn’t happening.

Surge pricing isn't coming to grocery stores, no matter what NPR says
Photo by Raul Gonzalez Escobar on Unsplash

First of all, here’s the lead paragraph from the NPR story, written by Lola Murti. I’m disappointed that NPR thought this was either accurate or newsworthy as a lede, because it is 100% undiluted sensationalistic horseshit from start to finish.

Grocery store prices are changing faster than ever before — literally. This month, Walmart became the latest retailer to announce it’s replacing the price stickers in its aisles with electronic shelf labels. The new labels allow employees to change prices as often as every ten seconds.

A ten second refresh rate is not the same as “labels that allow employees to change prices as often as every ten seconds.”

This leads into:

Apps like Uber already use surge pricing, in which higher demand leads to higher prices in real time. Companies across industries have caused controversy with talk of implementing surge pricing, with fast-food restaurant Wendy’s making headlines most recently.

Except this is not what happened at all. And you’d know that if you read or listened to NPR, ironically.

The “dynamic pricing” kerfuffle

Kirk Tanner, Wendy’s CEO, told investors during a February earnings call that some time in 2025 they’d introduce dynamic pricing. He didn’t offer any other details. This led news organizations to report – erroneously – that Wendy’s was going with a surge pricing model. Wendy’s later clarified that they are not. In fact, they never used the term. Dynamic pricing, they said, would help them discount prices for consumers during slower times of the day.

There is a gulf of difference between surge pricing and dynamic pricing, and it’s dangerous to conflate the two. You also can’t compare how Walmart (or Wendy’s) and Uber operate. Walmart and other retailers are much more heavily-regulated and heavily-policed by federal and state governments than businesses like Uber.

Back in 2022, Target had to pay out $5 million, after the San Diego County District Attorney sued them. They were adapting their app pricing using geofencing. The lesson here is that if you’re a national corporation, you have to do better. Or you’ll end up with DA’s up your keister like pigeons on stale bread.

There ain’t enough hours in the day

What’s more, retail employees stocking shelves at Walmart (or anywhere else) just don’t have the time for this nonsense. There simply aren’t enough of them, and they have much more important things to do.

Retailers throughout the U.S. are very hard-pressed to have enough workers on hand just to stock and “face” products. (Facing is bringing products to the front of the shelf, and orienting them label-first to make them easier to find).

Making sure that those shelves have accurate labels with correct prices is another huge logistical problem. And it’s an important one, because local governments can (and regularly do) fine retail businesses for displaying the wrong pricing. There is a lot of law on the books to protect consumers when it happens.

In the old way of doing things, shelf labels are printed, put on the shelf in a spot where the product is, and are updated as prices fluctuate. This costs companies a lot of money – first in wages to employees, then in lost profits when consumers discover discrepancies.

Checks and balances

Another problem with the basic fallacy of “up to every ten seconds” is that large retailers already have internal processes to control and affect pricing. This isn’t something in general that employees can do on their own – it’s a process that’s more carefully managed and controlled on a regional or central level by people way up the corporate pay grade, not by the folks greeting you at the store.

Don’t get it twisted. This isn’t about surge pricing. An apple will be the same price at the register as it is when you put it in your shopping cart.

Electronic shelf labels are all about improving the efficiency and accuracy of that entire process and reducing labor.

Walmart isn’t exactly on the bleeding edge here, either. Visit Kohl’s department stores or Ace Hardware stores and you’ll see e-ink labels everywhere. It’s proven technology that works, and most importantly, doesn’t screw over the customer.