The BareStory
A study released Tuesday by nonprofit organizations, including Consumer Reports and Groundwork Collaborative, found that Instacart’s artificial intelligence pricing tools can result in different prices for identical items for shoppers at the same retail stores. The research examined pricing at retailers such as Safeway, Target, Albertsons, Costco, and Kroger.
The study, which involved 437 participants, claimed that nearly 75% of the items it tested were offered at varying prices. According to the organizations, the cost for an identical basket of goods at a single store could vary by about 7%, potentially amounting to what they calculated as a cost difference of around $1,200 annually for a household. In one example cited by the research, a carton of eggs at one supermarket was listed at five different prices for different users. The report also alleged finding evidence of "fictitious pricing," where different "original" prices were shown to customers.
In response, Instacart stated that a "small subset" of its retail partners use limited, short-term, and randomized online pricing tests. The company said these tests do not use personal, demographic, or individual-level behavioral data to set prices and that prices "never change in real-time." Instacart added that the purpose of the tests is to help retailers understand price sensitivity so they can invest in lower prices. The company acquired an AI-powered pricing platform in 2022.
The findings were released amid growing attention on AI-driven pricing from regulators and lawmakers. The Federal Trade Commission began a study last year to better understand such pricing tactics. Separately, New York State recently enacted a law requiring businesses to disclose if they use customer data for algorithmic pricing, and on Tuesday, a U.S. senator introduced legislation seeking to ban companies from charging different prices for the same product based on consumers' personal data.
How it may affect me
As a U.S. reader:
• You may pay a different price than other shoppers for the same grocery item on Instacart. One study calculated this could cost households over $1,000 annually.
• The extent of this AI pricing is disputed. A study found it widespread, while Instacart states the tests are limited and used by few retail partners.
• Federal and state lawmakers are scrutinizing these practices. This could lead to new laws requiring companies to disclose or stop using certain AI-driven pricing strategies.
