Retailers have spent years collecting information about their customers. They know what shoppers buy, how frequently they shop, where they live, what they browse online and, in many cases, how they respond to promotions. That data can be enormously valuable.
It can help retailers stock stores, personalize marketing offers, and determine which products to put on sale. But there's a line that increasingly worries consumers, and it's using that information to determine how much an individual shopper pays. New Jersey has now decided that line has been crossed.
Governor Mikie Sherrill signed the Fair Price Protection Act in July, making New Jersey the third state to enact legislation restricting surveillance pricing. Maryland and Connecticut passed similar laws earlier this year. The New Jersey law prohibits grocery stores and third-party grocery delivery platforms from using personal data to set individualized prices for groceries and other covered products.
These days, more stores use electronic shelf labels to replace paper tags with wireless screens that update instantly. That makes surveillance pricing even easier to pull off. New Jersey is also imposing a one-year moratorium on new electronic shelf labels as experts study the impact.
Retailers that already use these systems, however, can continue to do so. Of course, retailers may have legitimate reasons to want to use these systems. Electronic shelf labels can make price changes faster, reduce the labor involved in changing thousands of paper tags, and potentially reduce errors.
The concern is what retailers might eventually do with that capability. A digital label can change with a keystroke. That raises obvious questions about whether retailers could eventually move toward pricing that changes based on information about a given shopper.
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