Why Some Shoppers May See Prices Changing by the Day

Summary

---

WSJ Your Money Briefing

Episode: Why Some Shoppers May See Prices Changing by the Day
Date: February 7, 2022
Host: J.R. Whalen (B)
Guest: Charity Scott, WSJ Reporter (C)

---

Brief Overview

This episode examines the increasing prevalence of dynamic pricing in retail stores, both physical and online. As inflation and supply chain disruptions put pressure on retailers, many are turning to rapidly updated price strategies—sometimes changing prices multiple times per day. The discussion explores the implications for shoppers, how the technology works, and the customer experience challenges that emerge as a result.

---

Key Discussion Points & Insights

1. The Shift to Dynamic Pricing

• Dynamic pricing is expanding from a few industries (like airlines and gas stations) to everyday retailers, including grocery and hardware stores, as well as major online platforms ([02:26]).
• Retailers previously adjusted prices monthly, quarterly, or weekly, but now some update prices daily or even several times a day ([02:26], [00:53], [05:50]).

2. Why Are Retailers Changing Prices So Frequently?

• Retailers cite rising production, labor, and shipping costs and ongoing product shortages due to COVID-19 as key motivations for frequent price changes ([03:21]).
• Facing tighter margins and unpredictable stock, retailers seek to remain competitive while managing costs ([03:21]).

3. How Dynamic Pricing is Implemented

• Two main options for brick-and-mortar stores:
  • Physically printing and replacing shelf labels, which is costly and time-consuming.
  • Adopting digital price labels, allowing real-time updates but requiring upfront investment ([03:52]).
• Software-powered solutions underpin most dynamic pricing, analyzing factors such as wholesale costs, product shortages, and real-time demand ([04:35]).
• Large retailers often develop proprietary systems, while others use third-party services like Quick Lizard to automate decisions ([05:26]).

4. Consumer Reactions and Impacts

• Sudden price drops are generally welcomed by shoppers, but unexplained price increases can cause "sticker shock" and frustration ([02:57]).
• The importance of perceived fairness: If consumers feel "ripped off," loyalty declines. But if comparative pricing shows parity across retailers, customers may accept higher prices as fair ([06:43]).
• Quote:
  • “If a customer feels ripped off, they are not going to come back to that store.”
    — Charity Scott, quoting a McKinsey consultant ([06:43])

5. Challenges with Price Matching and Customer Experience

• Dynamic pricing complicates price matching policies. For example, a Wayfair shopper saw a product’s price drop right after purchase and was told she’d need to return and rebuy to get the lower price ([07:27]).
• Companies struggle with balancing automated best pricing and existing guarantees for customers ([07:27]).
• Retailers are split on whether to continue offering flexible price matching in this new environment ([07:27]).

---

Notable Quotes & Memorable Moments

• Dynamic Pricing Frequency:
  “Many retailers have gone from updating their prices monthly or quarterly or even weekly to updating their prices as frequently as once a day and in some cases many times a day.”
  — Charity Scott ([00:53], [02:26])

• On Surprising Consumers:
  “If a price all of a sudden goes down, then the consumer is likely to feel pretty good about it. But when a price is going up ... it can lead to people feeling a bit of sticker shock.”
  — Charity Scott ([02:57])

• On Retailer Motivation:
  “Retailers are saying that these moves are coming in response to rising production, labor and shipping costs, and also as a response to product shortages associated with the COVID-19 pandemic.”
  — Charity Scott ([03:21])

• Merchants as Data Analysts:
  “It's like merchants are now in the analytics business.”
  — J.R. Whalen ([05:23])

• Historical Context:
  “It's more that [dynamic pricing is] just being used now in every corner of the retail industry ... gas stations ... airliners ... very large retailers such as Amazon and Walmart.”
  — Charity Scott ([05:50])

• On Customer Loyalty and Price Fairness:
  “If a customer feels ripped off, they are not going to come back to that store.”
  — Charity Scott relaying McKinsey insight ([06:43])

• Price Matching Dilemma:
  “[Price matching] puts retailers in a bit of a pickle because they believe that they are offering the best price ... potentially undercutting that price by offering price matching can cause problems...”
  — Charity Scott ([07:27])

---

Timestamps for Key Segments

• [00:35] Introduction to dynamic pricing and inflation’s effects
• [02:16] What dynamic pricing looks like and where it’s showing up
• [03:21] Reasons for frequent price changes (costs, shortages, pandemic)
• [03:52] How stores implement dynamic pricing (manual vs digital labels)
• [04:35] Role of software and analytics in pricing decisions
• [05:50] Dynamic pricing’s historical context across industries
• [06:43] Consumer perceptions, price fairness, and loyalty ramifications
• [07:27] Price matching complications and customer experience stories

---

Summary Flow and Episode Tone

The tone of the conversation is informative and straightforward, giving practical insight into a complex and rapidly evolving topic that directly impacts consumers’ experience at the register. Charity Scott provides clear, succinct explanations, often referencing real-world examples and reporting interviews, making the topic accessible even to those unfamiliar with pricing strategy.

---

Episode takeaway:
Shoppers should expect more frequent and sometimes unpredictable price changes as retailers adapt to supply chain uncertainties and rising costs using dynamic pricing. While technology drives flexibility and competitiveness for stores, it also presents new frustration points for consumers, especially around price fairness and post-purchase experiences.

---

Transcript

[A]

Still running global payroll like a relay race deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday SAP Netsuite operate like a local everywhere visit d e l.com WSJ that's d e e l.com WSJ.

[B]

Here's your money briefing for Monday, February 7th. I'm J.R. whalen for the Wall Street Journal. With inflation at 7%, household budgets are being stretched thin. Dealing with prices that go up every few weeks is bad enough, but now prices at some stores are changing a lot faster than that and that's caught many consumers off guard.

[C]

Many retailers have gone from updating their prices monthly or quarterly or or even weekly to updating their prices as frequently as once a day and in some cases many times a day.

[B]

So why are businesses doing this and how are shoppers responding? On today's show, we'll talk with our reporter Charity Scott about the growth of dynamic pricing. That's after the break.

[A]

Still running global payroll like a relay race deal replaces fragmented payroll vendors with one global system. No third parties hire, manage and pay teams in 150 plus countries with in house local experts and white glove delivery and deal plugs into what you already use. Workday SAP Netsuite operate like a local everywhere visit d e l.com WSJ that's d e e l.com WSJ.

[B]

The next time you're out shopping, you might see prices have changed, not necessarily because of inflation. More businesses are experimenting with something called dynamic pricing strategies that let them change prices a lot faster than they used to. So what does that mean for you and your next trip to the store? Here to discuss is WSJ reporter Charity Scott. Charity, thank you so much for being with us.

[C]

Thanks for having me.

[B]

So, Charity, walk us through this dynamic pricing approach. What kinds of stores is it showing up in and what does it look like for customers?

[C]

Consumers might be seeing dynamic pricing showing up at the grocery store, at places like hardware stores, and at many online retailers. Many retailers have gone from updating their prices monthly or quarterly or even weekly to updating their prices as frequently as once a day and in some cases many times a day.

[B]

Now, for consumers, I imagine it has to be pretty surprising to see prices changing so rapidly.

[C]

Well, I guess it depends on what direction those prices are moving in. If a price all of a sudden goes down, then the consumer is likely to feel pretty good about it. But when a price is going up and it may not be clear to the consumer why that's happening, it can lead to people feeling a bit of sticker shock.

[B]

And so why would retailers see the need to change prices so frequently?

[C]

Well, retailers are saying that these moves are coming in response to rising production, labor and shipping costs, and also as a response to product shortages associated with the COVID 19 pandemic.

[B]

Sure. We've been talking about those supply chain issues and all the ways they've been hitting consumers financially for a while now. So can you break down how this actually works? You know, a lot of stores have hundreds of different products for sale. How are they able to change their prices so often and so quickly?

[C]

In a brick and mortar retailer, there are basically two options. One is to physically print and then relabel all of the prices that have changed, which can be very time consuming and expensive. The other option is to outfit the store with digital price labels, which essentially allow for retailers to update their prices in real time. Now, there's also an expense associated with this, so it's a bit of a trade off for these retailers to figure out which way they want to go.

[B]

Got it. And how are businesses making that decision about whether investing in this kind of technology is worth it?

[C]

I think the most important distinction is that most of these price changes are being powered or assisted by software. So the main thing to think about whether you're talking about a small mom and pop, or maybe you're only talking about one or two stores versus a large retailer like Best Buy that has many hundreds of stores, is that there is a dynamic pricing software that they're using that essentially recommends when a product should move based upon whether the product is going to cost more to restock from wholesalers, if there's a product shortage, and how much demand exists for the product, and many other factors.

[B]

Wow. It's like merchants are now in the analytics business.

[C]

Yes. So many large retailers do have developed their own proprietary software to do this. But there are also companies that offer software as a service like Quick Lizard that will provide this service to retailers looking to automate their pricing strategy.

[B]

So this use of technology to quickly change prices. And is this something new?

[C]

It's not. It's more that it's just being used now in every corner of the retail industry. But before now, there are examples of gas stations using dynamic pricing to adjust their prices as the price of oil change. Airliners use this to adjust the price of tickets throughout the day. And there are also examples of very large Retailers such as Amazon and Walmart using these methods for years to stay competitive with their peers while protecting their margins at the same time.

[B]

But, you know, with inflation running at 7%, consumers are extra careful about spending. So let's say a business feels it has to raise prices several times over the course of a short time period. Don't they run the risk of losing customers?

[C]

Absolutely. One of the people I spoke to was a partner at management consulting firm McKinsey Company, and he said that if a customer feels ripped off, they are not going to come back to that store. The important thing that he also noted, though, is that if a customer thinks the price is too high, looks around and sees that actually the price is in line with what other people are charging for that item, then they're likely to think, well, maybe this is a fair price after all, and return to the store that they're loyal to.

[B]

But let's say a customer buys a product and then sees that the price on the shelf has actually dropped not long after, what happens then?

[C]

Yeah, this presents a challenge for both businesses and consumers. I spoke with a Wayfair shopper that found a bed frame that she wanted to purchase and saw that the price had gone down almost as soon as she had completed her purchase. When she went to the company and asked for a price adjustment, she was told that she would have to essentially return and repurchase her bed frame, which she did not want to do, and that really turned her off to the company. Now, a representative from the company said that they do offer price matching within a brief window of purchase, but make exceptions during holidays and promotional events. Trying to offer price matching while using dynamic pricing does put retailers in a bit of a pickle because they believe that they are offering the best price to both be competitive and protect their margins. So potentially undercutting that price by offering price matching can cause problems, and therefore, retailers are kind of falling on both sides of this as to whether or not to continue to offer price matching.

[B]

All right, that's Wall Street Journal reporter Charity Scott. Charity, it's been great having you with us.

[C]

Thanks for having me. Have a good one.

[B]

And that's your Money briefing. I'm J.R. whalen for the Wall Street Journal.

[A]

Deal replaces fragmented Payroll vendors with one global system. No third parties, hire, manage and pay teams in 150 plus countries. Operate like a local everywhere. Visit D E-L.com WSJ.