The concept of “personalized” grocery store deals strikes some consumers as inherently unfair. How would you feel, after all, if you were charged more than the person in front of you at checkout for the same exact item? Few shoppers are likely to complain, however, if they’re the ones who are getting the deals.
When consumers make many purchases today, they don’t expect to necessarily pay the same as every other consumer buying essentially the same thing. Car prices vary based on dealership incentives, the time of the month, and your ability to haggle, among other factors. The prices for most components of vacations—airline tickets, hotels, cruises—are all over the map depending largely on when the purchase is made. New customers who sign up for cable packages, wireless plans, and other services routinely pay less per month than the loyal customers subjected to escalating bills.
Thanks to the ubiquity of loyalty programs at supermarkets, drugstores, and other retailers, there often are also essentially two different sets of prices for deodorant, bologna, and other mundane purchases. These programs are so common that the discounts they provide don’t seem much like discounts; instead, it’s more like there’s just a penalty, in the form of higher prices, for those who don’t participate.
Even with all of this variability in the marketplace, it seems like some line is being crossed with the possibility that you could be charged more (or less) than the person next to you for the same item, on the same day, in the same store. In the New York Times story detailing how such “personalized” pricing has come to major grocery chains via smartphone apps offered by Kroger and Safeway, there are those who worry about the lack of transparency and potential for manipulating shoppers with these customized offers. “There’s a sense of fairness that’s derailed here,” observed UPenn professor Joseph Turow.
“When you’re buying exactly the same product at exactly at the same point in time, and you and the person right next to you are paying different prices, you may get irritated with that,” Paul Ellickson, an economics and marketing professor at the University of Rochester, said in an NPR report on personalized grocery pricing.
To some degree, however, shoppers have had access to personalized deals for years. Do you recall seeing coupons or special promotions down at the bottom of a three-foot-long receipt from CVS or another major retailer? Chances are, offers like these were customized specifically for you, based on your shopping history as recorded and studied by the retailer’s loyalty program. If you have a history of buying diapers, for instance, the computer may have spit out a discount on other baby items such as formula or diaper rash cream. Now, it’s that sort of personalized discount that is likely to pop up on an app such as Safeway’s “Just 4 U” digital savings loyalty program.
In an era when comparison shopping at several retailers is possible with a few swipes of an iPhone, stores are embracing personalized discounts as a way to fight back against “showrooming”—to proactively give shoppers a good reason to come into the store and buy, rather than just buying at Amazon or another online seller. In a Baltimore Sun story about Safeway’s “Just 4 U” app, it was made clear that the supermarket had a few other competitors in mind when it developed the personalized deal program:
“This will make it more convenient for people to shop more exclusively at Safeway,” Steve Neibergall, president of Safeway’s Eastern Division, said in an interview last week. “Everyone is looking for savings and bargains. When people see how much money they can save … they won’t feel they have to go to Target or Walmart.”
In the Times story, another Safeway executive described personalization as “a consumer desire right now, not so much a consumer fear.” That’s true to some extent: Most shoppers will love the idea that they are getting some sort of special, exclusive deal created just for them. Who wouldn’t “desire” that?
The corresponding fear, of course, is that you’ll be left out and treated unfairly as other shoppers are presented with the opportunity to pay less than you. Chances are, however, that if and when that happens, you’ll never, ever hear about it.