New Jersey legislation is being considered that aims to target predatory pricing practices at the store. It’s a worthy goal.
But this misinformed legislation would inadvertently contradict the very goals it hopes to achieve. It would strip away consumer savings, burden grocers with restrictions, and ultimately drive-up costs for the very families it intends to protect.
The legislation, A-4085/S-3612, would prohibit businesses from using algorithmic pricing or surveillance pricing. At first glance, this sounds like a win for shoppers, but the bill would also restrict loyalty and personalized pricing.
It is important that state lawmakers and shoppers understand the benefits of customized discounts, coupons, and promotions for consumers. We do not want to allow misconceptions to prevent shopper savings.
As an example, when a shopper buys diapers and later receives a coupon for baby products through their grocery loyalty account, that’s personalized pricing. When a store offers a discount on breakfast cereal to a family that buys it every week, that, too, is customized pricing.
These aren’t surveillance schemes — they’re the backbone of popular loyalty programs that save New Jersey families real money every week. Consumers opt into these programs to access promotions tailored to their preferences.
According to Forrester, 85% of U.S. online adults belong to at least one retail loyalty program, with grocery programs among the most popular. In addition, stock-up sales, locked-in savings, holiday promotions, and targeted coupons are all important ways for New Jerseyans to shop and save.
The legislation, as currently drafted, includes unclear language that would jeopardize retailers’ loyalty programs, discounts, coupons, rewards, points, extended sales, and various other promotional offers. Retailers may be forced to eliminate their savings programs to avoid legal uncertainty and penalties.
Perhaps most frustrating is the proposed bill’s distorted view of electronic shelf labels (ESLs), which are simply digital labels that display the price of the product, no different than the traditional paper label. These modern tools allow stores to display accurate, up-to-date prices across thousands of products simultaneously. Yet the bill lumps them with surveillance pricing technology.
ESLs don’t track individual customers, and they don’t change prices based on who is standing in the aisle or surge during high customer demand. That’s factually wrong.
Research demonstrates ESLs do not lead to surge pricing or price gouging. ESLs offer increased price accuracy and integrity. Traditional paper price labels require frequent manual updates, opening the door to pricing inaccuracies and inefficiencies. ESLs solve that problem — and its usage is rapidly becoming standard practice.
In fact, the New Jersey Office of Weights and Measures helped develop a pricing guide, which notes that retailers should “consider the adoption and implementation of digital signage, such as ESL, for efficiency and ease in pricing, unit pricing, price changes, and price history.” (Check out this video from FMI – The Food Industry Association to learn more about the benefits of ESLs).
We agree pricing transparency is worth protecting. New Jersey already has tools to do it: price gouging laws kick in during emergencies, and existing consumer protection statutes cover advertising, weights and measures, and more.
An overwhelming 75% of consumers say the primary reason for choosing one store over another is simple: it offers the best prices and discounts, according to Snipp.
The tools this bill would restrict — loyalty discounts, flash sales on perishables, electronic labels — are precisely how grocers drive down prices for shoppers.
Mary Ellen Peppard is the Vice President of the New Jersey Food Council
