Several grocers are rolling out customized pricing based on shoppers' buying habits. A recent article in the New York Times explored whether the practice of charging different prices for the same product to different people at the same time was fair.
In most cases, incentives — or a special discount — are provided to encourage a shopper to buy an item she already buys or a complementary one. The tailored offers are based on information decoded from their loyalty cards. So far, they seem to be coming in "personalized deals" at several grocers. But the pricing model "over time could displace standardized price tags," predicted the Times.
Critics claim the use of personal shopping data in this way raises privacy concerns. Joseph Turow, a professor at the Annenberg School for Communication at the University of Pennsylvania, believes grocery store pricing is not transparent enough and "there's a sense of fairness that's derailed here."
But retailers said individualized coupons have already proved popular and websites such as Amazon have made consumers comfortable with custom offers and varying pricing. Tailored deals are seen as the tradeoff for any privacy concerns.
"If our consumer information is right, personalization is really a consumer desire right now, not so much a consumer fear," Michael Minasi, president for marketing at Safeway, told the Times.
On Safeway's second-quarter conference call, CEO Steven Burd said "highly personalized" offers under its new Just For U program had raised average basket sizes. He touted its advantages over past "mass-marker" approaches.
"I think that personalization will permeate the retail industry, the bricks and mortar industry, in a very broad way," added Mr. Burd. "It's the only way for them to compete with the Internet."
The Times report also detailed Kroger's work with dunnhumbyUSA to deliver specialized coupons to frequent shoppers as well as Shop & Stop's new mobile app that enable shoppers to scan products in aisles to gain special deals.
The more than 250 comments to the Times article generally ran negative with many touching on "creepy" privacy concerns. Many felt personalized pricing would only lead to significantly higher pricing on a regular basis for new or less frequent shoppers or those who didn't want to be data mined. Massysett, Washington, DC, suspected that knowing a grocer was providing special deals to certain customers may convince a customer to frequent a grocer with clearer pricing "where he knows he gets the same price as everyone else."
Still, a few were okay with the privacy tradeoff. Wrote Nasochkas, of
Cambridge, MA, "As a consumer, I would also prefer to receive offers I might actually use, as opposed to generic coupons for processed garbage I never buy."
How receptive will grocery shoppers be to trading off privacy concerns and other issues for customized shopping?