Why do American supermarkets sweep the dust under the carpet?

American supermarkets are implementing a digital renewal, but, if we investigate carefully, there is something that doesn't add up. Leelectronic labelsof the shelves (ESL), often defined as a symbol of innovation, have been introduced in thousands of stores nationwide and promiseefficiency, precision and modernity. But are they really modernizing retail, or are they simply hiding persistent demand planning flaws?

To understand this shift, we need to look outside the food industry.

Airlines have long used thedynamic pricingas a cornerstone of its business model: ticket prices fluctuate constantly, adapting to various factors such as seat availability, demand, time of day, seasonality and user search frequency.

A flight to the same destination can cost 50 euros one day and 200 euros the next day, this is not a coincidence, but is the result oftrend of data and algorithms in the background.For airlines, this strategy is not limited to maximizing revenue, but aims to fill every seat as efficiently as possible.

When used correctly in supermarkets, ESLs provide aadvanced methodto manage a logistical nightmare: the real-time updating of thousands of tags located on very long aisles. What previously required many hours and a large workforce can now be completed with just a few clicks. Promotions are updated instantly, prices are more accurate, and staff have more time to focus on operational tasks and customer service.

More and more, however, ESLs are becoming more and more convenient toolscompensation. Many supermarkets, instead of improving demand planning procedures, anticipating sales models, synchronizing stock levels and improving strategies in the different product categories, use ESLs as a "fix".

Prices are adjusted every day, even on an hourly basis, therefore, the use made of ESLs is not based on the correct forecast of demand. In this way, a "fix it later" culture is promoted instead of encouraging that of "plan better".

The real damage begins at this point.

American supermarkets (such as the US multinationalWalmart), instead of addressing the underlying problem ofstockoutsand ofinsufficient availability on shelves, they use price increases as a hedge: products sell out faster than expected, and some retailers simply increase prices instead of improving the responsiveness of their supply chains or replenishment systems.

This, however, is not a fair compromise.

Stockouts should lead to a better organizational system, not higher prices. When products are in short supply, the use of ESLs silently increases prices, giving the impression that the company is more interested in profiting from scarcity than avoiding it.

The damage now becomes irrecoverable when customers begin to think they are victims of deception and the natural consequence of this perception will be their growing propensity towards other competing supermarkets that do not manipulate prices. Even more worrying is when this strategy affects basic products, such as milk, bread, eggs and pasta, for which consumers generally do not expect price changes.

The real problem is not the missing product but thedecision to hide it behind a price increase, thus avoiding addressing the source of the problem. Technology ceases to be innovation the moment it is used as a substitute for responsible behavior. This process can be a useful tool for improving your retail strategy, but only if it complements planning and does not replace it. Supermarkets should use these tools to reduce food waste, enable faster promotions and increase operational efficiency, not to pass the cost on to customers when the system fails.

Whenever a customer is faced with reduced stocks of products, but at a higher price, they will increasingly ask themselves: "Why should I pay more if the store is not able to have an adequate supply?"

The long-term risk is that customers not only feel annoyed, but also manipulated. And once the idea is imprinted in the mind, it is difficult to go back. Customers will look elsewhere for honesty and lower costs: they will prefer retailers who communicate honestly and who use technology to add value and not to hide problems.

ESLs are not evil. It is the concept behind the system that is flawed, not the system itself.Correct planning is replaced by dynamic pricing, which translates more into an ephemeral illusion rather than an innovation. If supermarkets continue to use smart labels to cover up poor systems, they will lose control of their shelves and the trust that attracts and retains customers.

The future cannot be built using shortcuts. And you can't hide broken planning behind flashing prices.

The dust is not gone. It's just been swept under a digital rug.

Sources

Samuels, B. (2024, March 12).Walmart quietly begins rolling out electronic shelf labels across stores. Grocery Dive.https://www.grocerydive.com/news/walmart-electronic-shelf-labels-ESLs-grocery-retail/718442/

Elliott, C. (2025, July 1).Kroger’s facial recognition and digital pricing spark backlash amid surge pricing fears. The Times.https://www.thetimes.com/world/us-world/article/kroger-facial-recognition-supermarket-surge-pricing-vlfrt0dxl

Baker McKenzie. (2024, February 19).Electronic shelf labels pose myriad risks for retailers. Connect On Tech.https://connectontech.bakermckenzie.com/electronic-shelf-labels-pose-myriad-risks-for-retailers/

Anderson, M. (2024, June 30).Electronic shelf labels bring digital prices — and controversy — to grocery aisles. AP News.https://apnews.com/article/electronic-shelf-labels-supermarket-prices-digital-132ef73fbbe2eb13a8c724b55fb458d1

Aggarwal, C. (2024, June 18).As retailers like Walmart roll out digital price tags, fears of surge pricing grow. Modern Retail.https://www.modernretail.co/technology/as-retailers-like-walmart-roll-out-digital-price-tags-fears-of-surge-pricing-grow/