The Bank of England has highlighted a growing trend among UK retailers: the potential adoption of “dynamic pricing,” a system that adjusts prices based on demand. Currently, one in five companies use such market-responsive pricing tools, but this figure is expected to rise to one-third.
While there is no evidence that UK supermarkets are actively implementing dynamic pricing, several major chains are testing digital price displays. The Co-op, Morrisons, Asda, Lidl, Tesco, and Sainsbury’s are all exploring or have introduced electronic shelf labels (ESLs).
The Co-op has been at the forefront, deploying ESLs in stores to enhance the shopping experience by improving price transparency, inventory management, and reducing paper waste. Morrisons has also rolled out similar hi-tech labels. Lidl has followed suit, emphasizing the environmental benefits and increased efficiency that digital labels bring.
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Asda has equipped approximately 250 of its Express stores with digital tags, while Tesco and Sainsbury’s are in the testing phase. In contrast, Waitrose has stated it has no plans to implement dynamic pricing.
Andrew Opie, Director of Food & Sustainability at the British Retail Consortium, assured that supermarkets currently do not use and do not intend to use surge pricing. He noted that digital pricing provides retailers with the ability to update thousands of prices efficiently, helping maintain value for customers.
Consumer expert Martyn James commented on the complexity of supermarket pricing, pointing out how existing factors like special offers, regional price variations, and store formats already make pricing complicated for consumers.
Clare Lombardelli, Deputy Governor for Monetary Policy at the Bank of England, explained that digitalization has drastically reduced “menu costs” — the expenses associated with physically changing price labels. She noted that while some sectors are experimenting with technologies like electronic shelf labels, dynamic pricing could become more widespread in the future.
Clive Black of Shore Capital acknowledged the high costs previously involved in changing prices manually across thousands of stores. He said that while the initial motivation for electronic labels is operational efficiency and compliance, dynamic pricing remains a future possibility whose benefits for shoppers or shareholders are still up for debate.