AI's growing role in retail pricing impacts consumer costs

Supermarkets and fast-food giants are increasingly deploying artificial intelligence (AI) tools to digitize their operations, a trend that could significantly impact consumer prices. Companies such as McDonald's and Kroger are adopting AI-driven systems, raising concerns about dynamic pricing and its potential effects on the shopping experience.

McDonald's recently faced a lawsuit alleging the use of an AI-powered "pricing engine" to set menu prices and overcharge customers. While McDonald's denies using AI for individualized pricing based on customer willingness to pay, the company acknowledges providing franchisees with tools for informed pricing decisions.

Within the grocery sector, AI adoption is accelerating. Kroger, for instance, utilizes an AI platform called FlashFood to discount perishable items nearing their expiration dates. Electronic Shelf Labels (ESLs), enabling real-time price updates on digital displays, are also becoming more prevalent in stores like Amazon Fresh, Walmart, and Whole Foods, as well as at Tesco in the UK.

Experts caution that as AI becomes normalized in retail, dynamic pricing—where prices change rapidly based on market conditions like demand, timing, or competitor pricing—could become more widespread. This shift may lead to consumers encountering increasingly individualized and volatile prices, mirroring pricing models used by airlines, hotels, and ride-sharing services.