AI Pricing Puts Consumer Control in Retailers’ Hands

U.S. retailers are adopting digital shelf labels and artificial intelligence tools that can help set prices, prompting consumers to question how much control companies have over what shoppers pay. Legislators in at least 30 states have considered pricing bills this year, while the Federal Trade Commission has proposed an enforcement policy on using personal data to set individualized prices.

Who Controls the Price

Katie Thomas, who leads an internal consumer behavior think tank at management consulting firm Kearney, described the dispute as a question of power between companies and shoppers. “There are major tensions happening right now between who's really going to have the power with some of these algorithms and usage of bots and AI: the companies or the shopper,” she said.

Digital labels let stores change shelf prices electronically instead of replacing paper tags. The technology has long been used in Europe and Asia, and now it’s drawing attention as it spreads to major U.S. retailers, including Walmart and Whole Foods. Consumer advocates say the labels could eventually enable surge or personalized pricing, while labor unions have opposed the technology.

Walmart CEO John Furner wrote in a blog post last month that digital tags save workers’ time and keep prices current. He said the labels aren’t used to raise prices based on weather, time of day or an individual shopper. “We price the product, not the person,” Furner wrote. Thomas said social media posts falsely claim that electronic shelf labels Walmart plans to install in all its U.S. stores scan shoppers’ faces or cellphones to set individual prices.

Data, Algorithms and Oversight

Dynamic pricing changes prices in response to market conditions, including supply and demand. Airlines adjust fares as departure approaches, and Uber raises fares when demand exceeds the number of available drivers, a practice known as surge pricing. In 2025, web data company Decodo tracked changes across electronics, clothing and home-improvement supplies. About half of the U.S. changes it recorded were decreases, said Gabriele Vitke, a senior product marketing manager.

Retail technology company Relex Solutions’ Asa Farquhar said retailers typically update electronic shelf prices on a regular schedule, often weekly, because shoppers value consistency. Researchers tracked prices at an unnamed grocery chain and found “virtually no surge pricing” after the labels arrived. “Changing prices throughout the day, the way airlines or rideshare apps do, is exceedingly rare in grocery and general merchandise today,” Farquhar said.

Personalized pricing, which some advocacy groups and regulators call surveillance pricing, offers different prices or discounts based on information such as shoppers’ locations, incomes and web-browsing habits. Its use remains unclear. A Federal Trade Commission staff report released in January 2025 found that intermediaries offering tools to tailor prices and promotions worked with at least 250 clients, including grocery and clothing retailers.

The FTC has proposed an enforcement policy warning that failing to disclose the use of personal data to set individualized prices could violate consumer protection law. Maryland, New Jersey and Connecticut recently enacted restrictions on using shoppers’ personal data to determine what they pay. The Maryland and New Jersey laws focus on groceries, with exceptions for certain loyalty discounts and other promotional offers; Connecticut’s law covers more types of retail purchases.

Retailers’ Tools Under Scrutiny

A Federal Trade Commission antitrust lawsuit against Amazon, filed in 2023, challenged several practices, including an algorithmic tool codenamed Project Nessie. The agency alleged Amazon used the tool to identify products whose prices it could raise with competitors likely to follow, generating more than $1 billion in excess profits. Amazon said the allegations “grossly mischaracterize” the tool, which it said was intended to prevent retail price-matching from creating unsustainably low prices. The company said it tested Project Nessie for a few years, it didn’t work as intended and Amazon scrapped it before the lawsuit. A trial is scheduled for next year.

California prosecutors sued Target in 2022, alleging its app showed lower prices before shoppers entered stores and raised them once they were inside. Target agreed to a $5 million settlement and a ban on using geofencing technology to increase prices. The retailer said the app feature was used to “provide guests with accurate pricing, which can vary across stores and channels,” and said it didn’t personalize prices based on guests’ data or behavior.

The National Retail Federation said algorithmic pricing is a new way of doing what retailers have long done: monitoring and adjusting prices according to supply, demand, seasonality and competitors’ prices. A recent consumer lawsuit against McDonald’s alleged its pricing system used nonpublic sales data from competing locations to coordinate prices. The company called the lawsuit “filled with inaccuracies” and said it makes the tool available to U.S. franchisees to help them set prices at their individual restaurants.