Will Retailers Switch to a Price Tag System That Screws Customers at Every Opportunity?

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Yves here. Retailers intend to engage in very sneaky price discrimination. But big data is way overhyped and regularly underdelivers. It might be great at pricing airline seats, but airlines have only so many routes and run planes only so many times of day and days of the week. By contrast, the average grocery store has over 40,000 SKUs. They aren’t going to have granular enough data to discriminate finely on a lot of things. They may try to draw crude inferences, like “People who go to Starbucks daily are higher income and can/will pay more” but aside from using certain criteria to pick out less price sensitive customers, how much price gouging they might take is a crude inference. And what about stores you rarely visit, say the once a year at best sports store shopper?

In addition, this type of price discrimination is against the law in many cities which require merchants to post prices and honor them. But the threat of this sort of system is an argument in favor of not using ApplePay and other phone-based payment systems, which could provide even more granular info about your shopping habits, or not using a smart phone, or putting it in a mini Faraday cage when you are going on a serious shopping mission. Plus if this sort of system starts to be implemented, it’s not hard to imagine that software developers would implement apps to block inquiries from purchase snooping systems, or better yet, them incorrect data that says you are price sensitive (like a false history of shopping regularly at discounters).

By David Morris, co-founder of the Institute for Local Self-Reliance who directs its initiative on The Public Good. He is the author of “New City States” and four other non-fiction books. Follow him on Twitter: @PublicMorris. Originally published at Alternet

In the beginning there were no fixed prices. Every transaction involved a negotiation between buyer and seller. Then in 1861, as Guardian reporter Tim Adams informs us, Philadelphia retailer John Wanamaker introduced price tags, along with the slogan, “If everyone was equal before God, then everyone would be equal before price.” Wanamaker’s stated intent was to establish “new, fair and most agreeable relations between the buyer and the seller.”

For the next 150 years, fixed pricing became the norm. Companies determined prices either by pegging them to those of their competitors or by calculating the cost of a good or service and adding a profit, with an occasional white sale or going-out-of-business sale, or discounted day-old bread.

In the 1990s came the internet, and in the 2000s, online shopping and smartphones. Prices could be changed remotely and frequently. Initially businesses changed their prices largely to take advantage of a shortage of supply (e.g. Uber with its surge pricing) or an increased demand (airlines, in essence, auctioning off tickets to last-minute customers).

Big data emerged and with it the ability for businesses to know their customers in a most intimate and detailed fashion. Initially, sophisticated algorithms allowed businesses to individualize ads. Now as they’ve gathered even more of our personal data they’ve begun to individualize prices. As Adams notes, the travel site Orbitz calculated that Apple Mac users would pay 20-30 percent more for hotel rooms than users of other brands of computer and adjusted its pricing accordingly. Jerry Useem in the Atlantic maintains the price of Google’s headphones may depend on how budget-conscious our web buying history reveals.

Electronic price tags may soon allow dynamic pricing in brick and mortar stores. Such tags are already in stores in France and Germany and parts of Scandinavia.

The Guardian reports that B&Q, the largest home improvement and garden center retailer in the UK and Ireland, has tested electronic price tags that could change the price of an item, based on which customer is looking at it, something it can derive from the Wi-Fi connection to the customer’s mobile phone. Not yet in stores, but that may be just a matter of time.

Dynamic pricing strives to maximize the seller’s profit by raising the average price he receives. Economists believe that is simply good business tactics. The rest of us remain unconvinced.

We don’t like being taken advantage of. More than half the states have anti-scalping laws, a response to brokers buying up thousands of concert tickets, shrinking supply, and allowing them to charge concert goers far more than the face value of the ticket. Last year Congress got into the act, passing a law that makes it illegal for brokers to use software that bypasses online systems designed to limit the number of tickets an individual can purchase. But these laws target only a small slice of the retail sector and aren’t vigorously enforced.

We’ve also taken action to stop sellers from taking advantage of a scarcity imposed by natural disasters to charge exorbitant prices to desperate customers. Over 30 states have enacted laws against such price gouging.

But as Ramsi Woodcock, professor of legal studies at Georgia State University, observes, those outraged by Delta’s reportedly asking $3,200 for a ticket out of Florida as Hurricane Irma approached should be aware that dynamic pricing enabled Delta to charge the same price to last minute customers two weeks before.

We’ve imposed no limits on dynamic pricing, although we’re nibbling around the edges of imposing some constraints on the sale of our personal data. Woodcock believes dynamic pricing could have anti-trust implications. Anti-trust is justified by many as a way to stop or break up monopolies that could artificially raise prices and reduce total consumer welfare. In a detailed article, Woodcock argues that big data enables “price discrimination (that) extracts more value from consumers than uniform pricing, by tailoring price to the maximum level tolerated by each consumer.” And thus warrants anti-trust enforcement.

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78 comments

  1. vlade

    Dunnhumby (the company that operates UK’s Tesco’s loyalty card) has been doing big data on Tesco’s customer’s for decades (since 1994). After all of that, they got all of about 11 attributes that seemed to make _some_ difference. Tesco attempted to sell Dunhumby 3 years ago for 2bln, but failed – which means that the company that is on the leading edge of this is in fact less valuable that some fintech unicorns that pretend to do the same with about zero real world expertise.

    1. Antony B

      Used to work for them. Tesco failed to sell them because they wouldn’t guarantee they’d continue supplying data to them in the medium-long term. The value of the business is entirely a function of their continued exclusive access to Tesco’s (and their other retail clients’) data.

  2. PlutoniumKun

    I wonder if it will occur to Apple that a system like this would kill their market.

    Its already known that some travel booking websites raise their prices for people using Macbooks on the basis that they are less price sensitive consumers. If the mere possession of an iPhoneX while walking through your shop raises the price you pay for your groceries, even the most dedicated Apple fan is likely to buy a cheap Huawai to do their shopping.

    1. Bunk McNulty

      Better link for Orbitz story:

      https://www.cnet.com/news/mac-users-pay-more-than-pc-users-says-orbitz/

      1. Bunk McNulty

        And another link. From June 2012.

        http://abcnews.go.com/Travel/mac-users-higher-hotel-prices-orbitz/story?id=16650014

    2. YankeeFrank

      The easy workaround for this is to change your web browser user agent, which is what identifies your computer as a mac. There is a plugin for firefox, chrome, etc that allows you to change your user agent settings so you look like a ms windows or any other OS you wish.

  3. PlutoniumKun

    I would guess there would be a big backlash against any first movers for a pricing system like this. Anecdotally, I think one reason for the huge success of the German retailers Aldi and Lidl is the transparency of their pricing. Everything is ‘as priced’, no 2 for the price of 3 offers, store card points, special reductions, etc.

    I think many retailers are too clever for their own good, and consumers resent being forced to make difficult calculations to be sure they are getting value. People may not know how they are getting ripped off, but they know they are being ripped off when pricing is so opaque. Smart retailers, especially on the discount side, could make hay by exposing their competitors tricks.

    1. Kurtismayfield

      I think many retailers are too clever for their own good, and consumers resent being forced to make difficult calculations to be sure they are getting value.

      As the primary shopper in my family, I see retailers obscuring the true price of an item all the time. You can be in an aisle with ten different paper towel brands, and they will all have different price per whatever showing. One will be price per sheet, the other will be price per 100 sheets, the next will be price per square foot. I whip out my calculator sometimes to do a comparison.

      1. Louis Fyne

        Bounty is the only brand that I consistently buy. And the annoying thing about Bounty —different stores have exclusive SKU/sizes/quantities. And it’s impossible to keep in your head how 8 giant rolls relates to 6 huge rolls.

        Scott Adams calls this the “confus-opoly.” PS in my region, Target is consistently cheaper versus everyone by a noticeable percentage.

        http://blog.dilbert.com/post/160305585086/the-healthcare-confusopoly

      2. justanotherprogressive

        I noticed the last time I went shopping there were these little tags (almost unreadably small) underneath a few of the items that listed a “price per unit”. Since there were two different sizes, they had two different “price per unit” tags……but my question was: “What the hell is a “unit”? Did they mean oz or grams or what? There was no way I knew or could calculate what the cost of those cans were…..I’m sure they didn’t mean $0.19/can or $0.17/can……

    2. Carolinian

      Stores like Aldi and Lidl and Walmart have a business model that assumes price to be the biggest selling point for their merchandise. Or perhaps “value” would be a better term since the Walmart approach (arguably imitated by Aldi etc.) includes the view that a reasonable level of quality is necessary or customers won’t keep coming back. This is how Walmart came to dominate the US discount stores like Kmart that preceded it. That they have also brought Sears to the brink speaks to the point that it isn’t only about price and that a segment of middle class customers have been captured (one of the largest Walmarts I have encountered was next to tony Vail, CO).

      Since Walmart is the largest employer in the US it’s hard to argue that this view of retail hasn’t succeeded with customers (while squeezing vendors and employees). Surely the notion of variable pricing would only work with wealthy customers or a “your money or your life” operation like the US medical system.

      1. a different chris

        I followed you right up the the “reasonable level of quality” you associated with… Walmart? After that bumped me into the weeds for a moment, I again was able to pick up your track.

        I think Sears is more complicated than you make it, though. Or less complicated, as Eddie Lizard or whatever his name is made it impossible for Sears to figure out who they really wanted to be.

        1. John Wright

          Re Sears:

          I was in the local Northern California Sears on a Sunday, a few weeks ago.

          The time was spent looking through the tools, primarily made in China but a few USA and German made tools.

          Definitely spotty inventory, but some of the higher quality/higher priced stuff remains on the shelf.

          Sears has certainly cut the number of floor employees, but they still need at least one person to handle the registers.

          They had so few customers that one employee asked me if I needed help.

          I’ve only recently been in two Sears (one in SoCal, the other in NorCal).

          I can not imagine Sears surviving much longer, but maybe they are doing better elsewhere.

        2. Richard Hershberger

          I’m with you. I avoid Walmart for multiple reasons, including that I don’t trust their quality. This is true even with name brands, as Walmart has a history of forcing suppliers to make cheap knock-offs of their own products. An otherwise reputable brand may be cheap crap when sold at Walmart.

    3. lyman alpha blob

      …many retailers are too clever for their own good…

      Indeed. My first experience with this type of data mining and pricing was with the grocery stores in the Seattle area about 20 years ago. Safeway started using the now ubiquitous store-specific cards that you had to have in order to get any of their discounts and which tracked all your purchases. The neighborhood rival QFC did not. It did not take long to figure out that while Safeway had some cheaper prices if you used the card, many of their other items were actually more expensive than those of their competitor so there was not really any net savings, and possibly a small price increase if you bought just your normal items and didn’t only buy what was on sale that week.

      At one point before Safeway started this new system, I’d go to whichever store was closest. Once they started their new system, I went exclusively to QFC.

      1. oh

        When Amazon bought Whole Foods (whole paychex) it announced (with much fanfare) how it had dropped prices on many items. I visited WF after acquisition and found that they have increased prices of many other items by 30 – 40% (this went unannounced). I think this is a way for them to force users to use Amazon Prime, which presumably would drop the price a little (not as much as to offset the increases). What a scam!

      2. Cash

        When you apply for a store loyalty card, give them demographic info indicating you’re super budget-conscious. Single parent, lots of kids, lousy education, bad job and older.

        Or just use America’s default loyalty card home phone number: 202-456-1414.

        Which is also the main number for the White House. (This has nothing to do with Trump, Obama, Bush, etc. )

  4. cnchal

    Economists believe that is simply good business tactics. . .

    Economists believe all sorts of idiocy. As a customer seeing electronic price tags, and knowing they can change depending on an algorithm based on maximum merchant greed, I would give the manager a piece of my mind and walk out the effing door. The answer is to buy nothing from them.

    This should be flat out illegal, and the perpetrators in prison. Criminal minds at work. Have the coder bros no soul or conscience?

    1. WobblyTelomeres

      Have the coder bros no soul or conscience?

      Ha. They are 25 years old, devoured Ayn Rand and Orson Scott Card, and have recruiters and managers telling them they are “the best of the best of the best” until the [family blog] runs out their ears. They are insufferable. As, I suspect, I was 40 years ago. Sigh.

      1. Enquiring Mind

        To continue the Men In Black theme: They are the best of the best of the best. And they have no idea why they are here.

        So much knowledge, so little life awareness or wisdom, short termism in action.

  5. Robert Hahl

    My family has remarked to me several times that I never know the price of anything I bought in a store. I am probably not the only one.

  6. Kurtismayfield

    The problem with this is that it sounds like retailers want to use surge pricing for only their benefit. They have no problem extracting every penny from a person who normally overpays, but it doesn’t appear that they want to use supply and demand to change prices downwards. For example they should be selling hot dog buns cheaper in January than in July,

    A few states with actual consumer friendly laws will never allow this.

  7. Bugs Bunny

    A chain supermarket near my place in an “affluent” Parisian suburb does this already. The shop is right across from the commuter train station and like clockwork at 6PM certain prices go up – especially wine and liquor. It’s very disturbing and I only shop there now if I absolutely can’t go anywhere else.

    1. Anon

      Gas stations in my town have changed to electronic price/gal. displays and do this sort of thing during rush hour.

      1. sierra7

        I’ve noticed this practice where I live in the Sierras, CA. We get a lot of tourist traffic out of the “Valley” going to Yosemite. You can go past one station in the morning and the price is different than when coming by again in the afternoon or weekends. “Advantage Pricing”….but, it kind of screws the locals who live here year around.

  8. vidimi

    since airlines and train companies began adopting demand-pricing, i’ve been traveling much less as a result; hardly taking any weekend city breaks at all. so if the effect of retail price gouging will be to get us all to consume less, it might end up doing us an unintended favour.

    perhaps it’s nature regulating itself.

  9. Ned

    Wouldn’t it make sense for people to just turn their phone off when entering a store?

    I’ve heard “I’m not paying that price for that!” or “Not at that price!” or “You must be kidding!”
    quite a few times lately in retail stores. Is it the internet or just price gouging from merchants that’s engendering this friskiness?

    I had a choice of a “German designed”, but made in China, carry on for $500 sold in a retail store and opted for the one for $70 from Costco. They were probably made in the same factory.

    You can find high quality American made items in garage sales, thrift shops and used building material yards for a small percentage of the price at retail. The quality will be far higher too than the “designed in Germany, or California”, but made in the same Chinese factory as the dollar store garbage.

    When do we start seeing merchandise made in Burma?, the next cheap slave pit now that China and Vietnam have harvested what’s left of American production machinery and jobs?

    1. Ian

      Had a similar thought, simply leave your phone in the vehicle or turn it off. Second hand for many items is also something I frequently do.

  10. Whoa Molly

    Re: Faraday cage
    1. Does anyone know of decent smartphone ‘faraday wallet or pouch’? They are surprisingly hard to find.
    2. Pretty sure turning off phone is no solution. Would have to do more digging than I am willing to do right now but think most phones still have some level of tracking and response when off.

      1. Whoa Molly

        iPhone won’t allow you to take battery out. No idea what happens if you take battery out of Android phones.

        Now I will have to dig into this. I think I remember reading somewhere (?) when the Snowden revelations were dominating the news that turning off the phone did not disable tracking, or prevent remote ‘turn on.’ But my memory is vague, and I can’t easily find anything about it online.

        1. WobblyTelomeres

          Taking the battery out works, with the only power remaining being capacitive. The market is really price sensitive, so much so that “super caps” are hard to justify. If you worry that there may be enough of a charge to read the contents, then …

          Wrapping the phone in several layers of aluminum foil will also work. If you doubt this, wrap your phone, then call it from another phone. Just make sure there are no gaps in the wrap.

          Note: if you can’t take the battery out of an iPhone, consider not buying one. :)

        2. Knifecatcher

          None of the top Android phones have removable batteries anymore either. LG was the last holdout with the G5 and V20 and their successors both have non-removable batteries. Samsung, Motorola, Sony, etc. all changed over years ago.

      2. JeffC

        As an electrical engineer who has made lab measurements of signal leakage through metal boxes designed to contain everything, an observation: A “Faraday cage” metal container will reduce the range at which evil electronics can interact with your phone to a degree that depends on the quality of the seal where the box closes. If you are trying to reduce your phone’s range from miles to feet, you’re probably going to need a box sealed with screws. A metallized-cloth bifold wallet or flap-close handbag may reduce your phone’s range enough that it can’t quite receive calls, but it isn’t likely to shield you enough to matter from electronic systems right in front of you. I have not taken these into the lab, but my sense based on related lab experience is that most enclosures marketed as having Faraday shielding are basically designed to separate you from the purchase price. I doubt any of them have been lab tested.

        For what it’s worth though, the tighter the metal seal, the better. Signals leak through the cracks. In fact, a properly sized and shaped slot in a metal sheet can be used as a very effective antenna, making the sheet the opposite of a shield.

        I expect that current phones are truly offline when powered down, though certainly they could be designed with more nefarious behavior.

        iPhones do not have removable batteries, so powering down is for them the only option for going offline.

        1. Whoa Molly

          Re: faraday cage

          Thanks JeffC. What you say sounds about right to me.

          What surprises me as I muck around looking at this stuff is how little info there is, and how unreliable it “feels”. Also, how few faraday cages on the market. I would think it shouldn’t be difficult to make something of reasonable cost and light weight. Even if it involved a couple screws. By comparison, the technology and design effort used in modern camping and back-packing gear is way beyond something as simple as a faraday cage.

        2. Enquiring Mind

          Don’t forget to Faraday your wallet to protect against leakage of information. All those cards with magnetic stripes, for example, not all of them credit-related.

          Do you have a health care membership card?
          Or some random affinity card?
          Or your driver’s license?

          There are cheap aluminum wallets available [see dollar stores] that are big enough to hold several cards, and while they probably leak a little, they are better than wandering around unprotected inviting trouble for any joker with some RFID or similar scanner.

          Anecdata: my daughter called to relate a tale after a couple had tailed her in a store. She overheard them a few minutes later in the next aisle asking if the scan [of her info] worked. She set about to freeze her cards and to get new cards immediately to foil their ploy. Now she carries those in a little metal wallet. Not chic, but practical. Someone will come up with better and more attractive solutions out of necessity.

        3. Octopii

          A friend of mine has built a multi-million dollar business in a few short years selling shielded phone lockers of his own design to the government….

    1. a different chris

      The problem is, here in in America anyway, most of us show up at the stores in cars and we could leave our phones in said autos. We don’t because we pay for the d*mn things 24 hrs a day and do not want to miss calls.

      I’m your average older white guy and, sad to say, like all of my class* the only reason anybody calls me is because it is really important. So disabling my phone is not an option.

      *was it Saturday Night Live or somebody who had “Middle Aged Man” that could fix anything? That’s me. If my phone rings I have to be somewhere or something important broke.

    2. Nat

      If interested ou can make a little reusable, envelope-like (i.e. with closable flap “lid”) pouch out of aluminum or tin foil (preferably a number of layers thick) that should be almost as good as any fancy-pancy pocket Faraday cage that anyone could sell you (possibly using the very adjustable pricing scheme you are hoping to avoid with it). This DIY pocket-Faraday-cage model will only cost you a like 50¢ worth of aluminum or tin foil and take you like 10 minutes to make.

      … of course, the one issue with the DIY-model is no one likes to be associated with the “tinfoil hat” crowd even though here it is slightly indirect by belonging to the “tinfoil wallet” crowd.

      Also don’t get me wrong, it is ridiculous we may have to resort to this in society, but it is nice to know when we have to make ridiculous adjustments to our lives to save ourselves from the proverbial “the man,” at least once in a while it may not cost us all that much to do so.

    3. Harris

      There are several sellers on (for at least now) Amazon that sell faraday cages for your cell phone and even wallets. There are several that sell just the fabric and you can sew your own much cheaper( what I did).

    4. Strider

      There are 2 common (and 1 uncommon) way these things are done today. My last job was with Aruba Networks who partnered with RetailNext (and an acquisition of Meridian Mobile Apps) to do these kinds of things.

      The first is by using your phone’s Wi-Fi and bluetooth. By default, your phone (and computer) will remember every network to which it has ever connected and will constantly attempt to find those networks again. In effect, your phone is constantly telling the world everywhere you’ve been. This list can be used to build a fingerprint. Bluetooth is similar. When you pair your phone to your car or some other device, it will constantly try to find that device by sending out signals that can be heard by anyone. In this case, turning off your phone (or turning off Wi-Fi and bluetooth) will stop this level of tracking. No need to resort to Snowden-level stuff here – retail stores do not have access to your carrier’s data or networks.

      The second is by enticing you to use the store’s app on your phone. The app will pull the GPS location and send it to one of their servers. In that case they know exactly who (and where) you are. Some phones allow you to limit what parts of the phone an app can access so you may be able to prevent that app from pulling your GPS location but YMMV.

      Note that these systems have less nefarious uses such as helping you locate items in the store and giving the store owner foot traffic data for evaluating the effectiveness of displays and things. Historically this was done with cameras.

      The least common method (due to the cost of the sensors and a store would need them every 6-10 feet) is the RFID system that Enquiring Mind spoke of. A lot of us carry RFID things with us (work badge, apartment gate badge, payment cards, etc) and these can be used to fingerprint you and “tailor your experience.” I expect this will become more common in the future but for now those sensors are too expensive to do on a large scale

    5. Anthony G Stegman

      Faraday pouches for phones and laptops are available online. Probably also in some brick & mortar places if you look around.

      1. ambrit

        Academy Sports carries them on an aisle near the back of their stores, next to camping supplies.

    6. PhilM

      Airplane mode. Turns off all broadcasting unless you explicitly enable wifi and bluetooth. See the Wiki on it.

      But that will change. Apple just made the first move in that direction with the latest releases.

  11. ambrit

    Quickly before I trudge off to drudge off. The “Salvage/Discount” stores have not the level of sophistication that the first line shops do, but they have been fleecing the downtrodden multitudes for years. Those, “amazing low prices” you may see on the aisles of ‘Fidels’ Fabulous Finds’ are usually made up at the sorting warehouse, or back room for the smaller vendors, based on the highest retail price to be found with a general nationwide search of prices.
    The spoilage at Salvage Stores is tremendous. A good quarter of the goods we receive are literal trash, and immediately junked. Notice that the warehouse sorters and pricers will pass on all of the junk, appropriately priced, to the outlet for sale.
    Since the prices of the merchandise is reduced on a semi-regular schedule, the percentages off change roughly once a week on average. We are talking about, say, 40% off drops to 50% off at a time. The real bargains start to appear at about 70% off and up. So, as I hear every day, from bemused and furious customers alike: “Who the H– sets these prices! You should be ashamed of yourself!” No one stops to think that the only time I will ever get to step foot on the boss’s yacht is when the top dogs need some extra rowers for the lower oar bank.
    Well, time to sleaze on off to help pay for another rivet on the boss’s private jet.

  12. Jamie

    Is there not an argument in favor of this practice similar to the argument in favor of progressive taxation? Should I be concerned if profligate money wasters pay more than I do for an item? Supply and demand applies not only to the commodities exchanged in retail markets, but also to the cash distributed among the populace. We have already seen retailers choosing to forego the mass market in favor of “upscale” markets. As long as cash is scarce for some and not so much for others, some retailers will target the not-so-much group, one way or another. And if those who are well paid don’t want to mind their money, or value each dollar less than those who find dollars scarce, why should they not pay a higher price? What is inherently “fair” about a single price that is the same for everyone regardless of the amount of resource they command? Is it not true that a single price is regressive in the same way a flat tax is regressive?

    1. JTMcPhee

      Ah, the Masters’ argument. Pricing of everything is for the Galt and the lame…

      I believe a former Secretary of Commerce (under Reagan? Or Clinton?) offered that the FTC and FDA ought to stop interfering in the Market, because people ought to have the “right” to pay a lesser price for shoddy and defective products, all in the name of Consumer Freedom (TM)… I might have the wrong office holder and Commander in Chief, but I expressly remember the “policy argument…”

      1. Jamie

        people ought to have the “right” to pay a lesser price for shoddy and defective products

        A market which contains quality and shoddy goods at different prices for different economic classes of people is not the same as a market that offers the same good at different prices for different economic classes of people. I have no illusion that the later kind of market would be “kind” to people without easy access to money. There is nothing inherently “kind” or “fair” about any market. Obviously the better course would be to fight for more equal access to money for everyone. But given conditions as they are currently, I can see no inherent “fairness” in single pricing and no inherent “unfairness” in the “dynamic” pricing this article is talking about (at least, no more than any market is inherently “unfair”).

        But I raise the question because someone more insightful than I may be willing to explain how single pricing is “more fair”, and I would be interested in learning if there are, in fact good arguments for it beyond my ken, or whether people’s negativity toward it is just a matter of single pricing being what we are accustomed to and believing any change “they” want to make is necessarily bad.

        1. Anon

          not the same as a market that offers the same good at different prices for different economic classes of people.

          That’s essentially what happens at a Nordstrom’s and Sear’s. They both have “quality” products, but at different price points. My well to do grandmother bought me Levi’s at ~$30, while my mom (lived through the Depression) found them somewhere else for $20. Same product, different price, different motivation.

        2. cnchal

          . . . Now as they’ve gathered even more of our personal data they’ve begun to individualize prices. . .

          Jamie walks up to the shelves looking at some shavers and the algorithm chortles, “Jamie is ripe for some extra plucking, let’s make his price $11.99 instead of $8.99” and Jamie goes to checkout to find the cheap guy in front of him paying $6.99 for the same thing. The algorithm knew the cheap guy was a hard sell so had to sweeten the deal. Fair?

  13. Abigail Caplovitz Fild

    Re individual-consumer based coping strategies (“solutions” needs to be broad based policy), I don’t understand what this means: “…something it can derive from the Wi-Fi connection to the customer’s mobile phone.”

    Is the store connecting to the phone by wi-fi? If so, does turning off the wi-fi work? If it doesn’t work, why not? And what does “derive” mean in that sentence? Is it using the wi-fi on the phone to access web browsing history?

    In short: how does this tech actually work?

    1. JeffC

      If wifi is the snooping tech, turning wifi off should be enough.

      Note that for an iPhone running iOS 11, just out, wifi must be turned off in “settings” to be truly off. Supposedly, turning it “off” in the flip-up notifications screen disconnects it from the hotspot/router but leaves the wifi system on and browsing for other potential connections. That might be enough “disconnectivity” or not.

    2. John Zelnicker

      @Abigail Caplovitz Fild – I know little about the snooping tech, but there is a lot more than browsing history that could be accessed depending on how much of your life you manage on your phone. The apps you have installed could tell them where you have a bank account, whether or not you have a brokerage account, your marital status (any dating apps on your phone?), whether or not you have children, etc.

      With both Wi-Fi and cell signals emanating from your phone, there are far too many ways for people of malign intent to get your information; which is why I don’t use my phone for anything other than voice calls, text messages, and games.

      1. Abigail Caplovitz Field

        Thanks John & JeffC

        I am paranoid enough about my smartphone’s spying on me to have only google maps and solitaire on my phone, no other apps, but not paranoid enough (yet) to go dumb phone–the email on my phone is too helpful, and I appreciate many of the other conveniences it brings. So if my wifi and bluetooth are really off, and my apps are few, I should be at least a semi “hardened” target. And leaving my phone in the car is a good tip too John, thanks

    3. Strider

      There are 2 common (and 1 uncommon) way these things are done today. My last job was with Aruba Networks who partnered with RetailNext (and an acquisition of Meridian Mobile Apps) to do these kinds of things.

      The first is by using your phone’s Wi-Fi and bluetooth. By default, your phone (and computer) will remember every network to which it has ever connected and will constantly attempt to find those networks again. In effect, your phone is constantly telling the world everywhere you’ve been. This list can be used to build a fingerprint. Bluetooth is similar. When you pair your phone to your car or some other device, it will constantly try to find that device by sending out signals that can be heard by anyone. In this case, turning off your phone (or turning off Wi-Fi and bluetooth) will stop this level of tracking. No need to resort to Snowden-level stuff here – retail stores do not have access to your carrier’s data or networks.

      The second is by enticing you to use the store’s app on your phone. The app will pull the GPS location and send it to one of their servers. In that case they know exactly who (and where) you are. Some phones allow you to limit what parts of the phone an app can access so you may be able to prevent that app from pulling your GPS location but YMMV.

      Note that these systems have less nefarious uses such as helping you locate items in the store and giving the store owner foot traffic data for evaluating the effectiveness of displays and things. Historically this was done with cameras.

      The least common method (due to the cost of the sensors and a store would need them every 6-10 feet) is the RFID system that Enquiring Mind spoke of. A lot of us carry RFID things with us (work badge, apartment gate badge, payment cards, etc) and these can be used to fingerprint you and “tailor your experience.” I expect this will become more common in the future but for now those sensors are too expensive to do on a large scale

      1. Abigail Caplovitz Field

        Thanks very much Strider (of LOTR?)

        That reminds me to a) disable wifi/bluetooth/turn off my phone and b) prune my networks by telling my devices to forget them. (That works, given what you’re saying, right?)

        1. Abigail Caplovitz Field

          Sorry, obviously a) works, I was asking about b)–if I tell my devices to “forget” networks, can I disrupt these efforts to “fingerprint” me? I don’t use store apps–or apps in general, my phone only has google maps & solitaire.

        2. Abigail Caplovitz Field

          Sorry, obviously a) works, I was asking about b)–if I tell my devices to “forget” networks, can I disrupt these efforts to “fingerprint” me? I don’t use store apps–or apps in general, my phone only has google maps & solitaire.

  14. John Zelnicker

    Retail websites have been changing prices according to the location (and maybe the hardware/software) of online shoppers for a while now. One day a few months ago, I was looking for a product (can’t remember what) and brought up the Home Depot website. As it was loading I could see all the prices on the page flip to higher ones. Using another browser with a VPN routing me through non-US located servers (plug here for Opera), the Home Depot website showed me the lower prices I had glimpsed while it loaded on the first browser.

    The retailers may think they’re being smart, I think they are cheating.

    If brick and mortar stores start doing this, I’ll just leave my phone in the car or at home. I’ve spent the majority of my life without carrying a phone, so I can certainly do without it for a shopping trip.

    1. Whoa Molly

      Leaving phone in car seems to be a sensible, reasonable, inexpensive option while shopping in any store.

      Thanks.

      1. John Zelnicker

        You’re welcome. And if they cover the parking lot with their Wi-Fi signals, leave the phone at home.

      2. Arizona Slim

        For most shopping trips, I leave my phone at home. And I still use pen-and-paper shopping lists. What a Luddite.

    2. Anon

      The “shout-out” to the Opera browser is seconded, here. While the VPN option can slow the browsing process (at certain times of the day), I like getting my weather data in Celsius. (I use a Canadian VPN server.)

  15. DJG

    I’m noticing something even more basic: Many places don’t display prices at all anymore, or if they do, the board with the price list is separate and not all that close. I just had this experience in Newark airport. The pizza place didn’t put the price with slices, and the electronic kiosk only issued electronic receipts. And the customer (me) is in a place that I am not familiar with, which makes for a differential in knowledge.

    And we can make an assumption about behavior, too: As if I was going to return from Chicago to rectify a mistake in what I was charged at Newark.

    Locally, in Chicago, same thing, all the time: Stores that just don’t display prices. Resistance to giving receipts. (Save a tree! Bilk a customer!)

    What store needs surge pricing when they can just make up prices all day long?

    1. Yves Smith Post author

      I live in communist NYC and our retail store law requires prices to be displayed (and more important, the city occasionally sues stores for retail store violations, like not taking the tare off weights when pricing food sold by weight). It may well be illegal under your retail store license rules too but the officials don’t enforce the law and no one has bothered suing.

      You might check and if it is against the law, you might get a local TV station interested. It’s an easy story and would embarrass city officials and whatever stores they used as examples.

      1. beth

        Ah-h-h, if only all cities were like that. I lived in one small city where the “best” grocery store put discount prices on the shelfs, but never changed the prices to reflect any discounts in the cash register. No one seemed to notice until a new grocery came to town and posted a sign near the check-out saying that they would give you the product free if you were charged the wrong price.

        Opps, Harris Teeter was found out. I think some stores still do this but randomly.

  16. flora

    Google is getting into the smart phone biz. All the better to advertise its (price war) vendors to you ?
    http://www.zdnet.com/article/google-launches-pixel-2-pixel-2-xl-ai-first-phones-for-649-849/

    1. Arizona Slim

      Far be it from me to be a Google fan, but I have heard good things about the Pixel’s camera. Especially in low-light conditions.

      That being said, my next camera phone will probably be a Samsung.

  17. Martin Finnucane

    Browsing the above comments, it strikes me as absurd that anyone would own an iPhone. You pay a king’s ransom for the thing, and then it insults you: an ‘off’ settings that don’t really turn anything off, a battery that cannot be removed, and – as has been discussed on NC extensively – the inability to repair it. And, of course, the proprietary data/power interface that won’t allow you to just use USB like everybody else. And, I’m sure attentive readers could enumerate many other such “features not bugs.” So am I missing something? Would somebody really pay $1k for this nonsense?

    If taking the phone with you into a grocery store proves to be a bad idea, then I think having the phone in the first place would be a bad idea. Get a flip phone. Buy groceries with cash.

    1. Octopii

      Well I like it – it does user-facing things very well. Obviously there are drawbacks, but also obviously, these are pervasive no matter the brand or OS. I do appreciate that my phone manufacturer is run by a formerly-closeted gay man…. he understands personal privacy firsthand.

      1. Anon

        he understands personal privacy firsthand.

        Only when it’s relative to others discovering your privacy. Apple probably uses it to their advantage.

    2. PhilM

      The iPhone is the cleanest dirty shirt. If you use an Android, you have no hope of security because updates are absent or missing, and no hope of privacy unless you root it. And then you’re going to get pwned before you know it, by any app you install, because you’re not in the walled garden anymore (where it’s not safe anyway).

      On the desktop and servers I use Linux, and that will give you some idea what I think of the Cupertino Idiot Tax. As much as Apple irritates me, I gladly use an iPhone and rejoice that my 5 still does everything I need. But not for long….

  18. Roger Bernard Houghton

    I live in Hong Kong where monopolies and cartels run the economy. We have two of everything – two supermarkets, two electricity providers, two bus companies, two ferry companies – but a profusion of banks and six property developers. The big guys all their money through the stock exchange to maximise value. All the two-participant markets copy each other’s pricing.

    The calculation of retail price for everything from cars to soap powder is easy peasy – check who has the most market share and discount a bit off his prices. It does not go any further. We have a Sale of Goods Act that is copied from UK and does not address flexi-pricing but I can imagine hotels and convenience stores welcoming it.

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