Imagine a scenario in which a store could change the price of a single item multiple times a day. The idea is called dynamic pricing, and it happens more often than you think in other areas of commerce.
“Dynamic pricing is this idea of changing prices constantly over short intervals, and as a result it may try to help a company maximize their profit,” said Yehua Wei, an associate professor of business administration in the decision sciences area at the Fuqua School of Business at Duke University.
Ride-share companies and airlines use this tactic when customers make purchases online. An Uber price can change based on the supply of drivers, the demand of passengers, or even the weather.
“When you book an airfare ticket online, the prices are updated fairly frequently,” Wei said.
So could the dynamic pricing method be used in brick-and-mortar stores?
“If the dynamic changes while I’m shopping for other things, and once I get to the cashier this price goes up, I’d be very upset. You can imagine many people would be very upset,” Wei said.
“I just don't think this is ethical,” he added.
Earlier this year, Wendy’s announced it may experiment with dynamic pricing, which many interpreted as potential surge-pricing during the busiest parts of the day. Wendy’s then clarified that they had no plans to raise prices during high-demand periods.
Related Story: No, Wendy’s isn’t trying surge pricing. Here’s what it’s changing.
Walmart recently announced it will add digital shelf labels to 2,300 stores by 2026, allowing them to change price tags more easily. This caused some concern among shoppers about how this new tech will be used, and if dynamic pricing might be incorporated.
However in a blog entry, Walmart noted the new digital price tags would be used to help increase productivity, making no mention of moving toward dynamic pricing.
“I don't think people should be too worried about this,” Wei said.
Experts say dynamic pricing can also be helpful in certain scenarios, like dropping prices to encourage sales when items are near expiration. This could be beneficial for food waste, for example.
@scrippsnews You know how airline tickets and ride-share apps have that magic trick of changing prices all the time? Experts are now pondering if this dynamic pricing could work in your favorite brick-and-mortar stores. #dynamicpricing #retailtech ♬ original sound - Scripps News
