SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
bob casey
'Corporate Greed Is Out of Control': Warren Slams Kroger's AI Pricing Scheme
"Kroger is trying to pull a fast one on us by using digital price tags—a move that could let them use surge pricing for water or ice cream when it's hot out," said the senator.
Aug 09, 2024
Expressing doubt that a new artificial intelligence-powered "dynamic pricing" model used by the Kroger grocery chain is truly meant to "better the customer experience," Sens. Elizabeth Warren said Friday that the practice shows how "corporate greed is out of control."
Warren (D-Mass.) was joined by Sen. Bob Casey (D-Pa.) on Wednesday in writing a letter to the chairman and CEO of the Kroger Company, Rodney McMullen, raising concerns about how the company's collaboration with AI company IntelligenceNode could result in both privacy violations and worsened inequality as customers are forced to pay more based on personal data Kroger gathers about them "to determine how much price hiking [they] can tolerate."
As the senators wrote, the chain first introduced dynamic pricing in 2018 and expanded to 500 of its nearly 3,000 stores last year. The company has partnered with Microsoft to develop an Electronic Shelving Label (ESL) system known as Enhanced Display for Grocery Environment (EDGE), using a digital tag to display prices in stores so that employees can change prices throughout the day with the click of a button.
As Warren said on social media on Friday, digital price tags allow stores to "use surge pricing for water or ice cream when it's hot out," or raise the price of turkeys just before Thanksgiving.
Through its work with IntelligenceNode and Microsoft, Kroger has gone beyond just changing prices based on the time of day or other environmental factors, and is seeking to tailor the cost of goods to individual shoppers.
As the senators explained:
The EDGE Shelf helps Kroger gather and exploit sensitive consumer data. Through a partnership with Microsoft, Kroger plans to place cameras at its digital displays, which will use facial recognition tools to determine the gender and age of a customer captured on camera and present them with personalized offers and advertisements on the EDGE Shelf. EDGE will allow Kroger to use customer data to build personalized profiles of each customer... quickly updating and displaying the customer’s maximum willingness to pay on the digital price tag—a corporate profiteering capability that would be impossible using a mere paper price tag.
"I am concerned about whether Kroger and Microsoft are adequately protecting consumers' data, and that as Kroger expands the personalized customer experience, customers will ultimately be offered a worse deal," wrote Warren and Casey.
The lawmakers noted that the high cost of groceries is a key concern for workers and families in the U.S., as chains adopt numerous methods to price-gouge customers including "shrinkflation" and "greedflation"—filling packages with less product and keeping prices high even though supply chain issues have largely resolved since inflation was at high during the coronavirus pandemic.
Kroger, which could soon increase its number of stores by several thousand with a potential $24.6 billion acquisition of Albertsons, had an operating budget of $3.1 billion last year, with gross profit margins above 20% over the last five years.
Meanwhile, said Warren and Casey, U.S. households spent an average of 11.2% of their budgets on food in 2023.
"The increased use of dynamic pricing will drive company profits higher—leaving consumers with the bill," wrote the senators. "It is outrageous that, as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out surge pricing and other corporate profiteering schemes."
Warren and Casey demanded the McMullen provide information about its use of ESL platforms including EDGE, asking how the company establishes prices using dynamic pricing and whether it has ever used EDGE to change the price of an item more than once in a day, among other questions.
The senators have previously introduced legislation to prevent shrinkflation, urged the Biden administration to use its executive authority to lower food prices, and proposed a bill to prohibit price gouging by empowering states and the Federal Trade Commission to enforce a federal ban.
Keep ReadingShow Less
Corporate Profiteering Schemes That Drive Inflation Detailed at Senate Hearing
"At every turn, companies are cutting corners on the path to record profits, and American consumers are paying the price," one expert testified.
May 02, 2024
Progressive policy experts took aim at corporate greed and profiteering during a Thursday U.S. Senate hearing on "shrinkflation," the process of reducing the size or quantity of a product while selling it at the same price.
At the Senate Committee on Banking, Housing, and Urban Affairs hearing—entitled "Higher Prices: How Shrinkflation and Technology Can Impact Consumers' Finances"—Chair Sherrod Brown (D-Ohio) began by acknowledging that "prices today are far too high, and families are having a harder time finding a fair price, seeing more of their paycheck vanish into thin air."
"All of this is happening while corporate profits hit record highs," the senator continued. "Let's be clear: The fact that prices and corporate profits are going up at the same time is no coincidence. A study by the Kansas City Fed found that corporate profits drove half of the price increases in 2021."
Bilal Baydoun, director of policy and research at the Groundwork Collaborative, testified that "in America today, a fair price, let alone a sweet deal, is harder and harder to come by. In the age of corporate concentration and high-powered algorithms, pricing is in the midst of a troubling transformation, and the price tag as we know it may become a relic of the past."
"At every turn, companies are cutting corners on the path to record profits, and American consumers are paying the price," he continued. "In a practice known as 'shrinkflation,' companies discreetly reduce the size or volume of common household items—everything from jars of peanut butter to bars of soap—to charge consumers more for less."
"For some essential goods like household paper towels, shrinkflation accounted for roughly 10% of the price increase consumers experienced over the last four years," Baydoun added. "Indeed, big profits increasingly come in smaller packages."
Accountable.US president Caroline Ciccone and other executive members of the group submitted a statement for the record asserting that "the American people are fed up with corporate greed and price gouging."
The statement continues:
Even as inflation has gone down, prices remain too high. Americans understand that corporate greed is a major driver of costs that make it difficult for their families to make ends meet.
Corporate profits have exploded since 2020, and a recent study by our partners at the Groundwork Collaborative found that for much of 2023, corporate profits drove 53% of inflation. Comparatively, over the 40 years before the pandemic, profits drove just 11% of price growth. In the final three months of 2023, corporate profits reached an all-time high of $2.8 trillion, according to Commerce Department data.
"From Big Food to corporate landlords to Big Pharma, CEOs across industries keep raising prices despite bragging of bigger and bigger profits and stock rewards for wealthy investors," said Liz Zelnick, director of Accountable.US' Economic Security & Corporate Power program. "These executives clearly didn't need to raise prices so high, but they did it anyway because they could."
"Yet one by one," she added, "conservative Senate Banking Committee members today gave a free pass to their corporate megadonors and instead disingenuously blamed the Biden administration's actions against junk fees and price gouging that are actually working to lower costs for everyday families. They should get their priorities in check."
Earlier this year, Brown and Sen. Bob Casey (D-Pa.) introduced a bill "to crack down on companies shrinking their products and raising their prices."
The Shrinkflation Prevention Act would:
- Direct the Federal Trade Commission (FTC) to promulgate regulations to establish shrinkflation as an unfair or deceptive act or practice, prohibiting manufacturers from engaging in shrinkflation;
- Authorize the FTC to pursue civil actions against corporations who engage in shrinkflation; and
- Authorize state attorneys general to bring civil actions against corporations engaging in shrinkflation.
"We need members of Congress to grow spines and stand up to more of these corporate lobbyists," Brown said during Thursday's hearing. "We need our colleagues to join us in efforts like this, to lower prices and stop these tactics that distort the market, stifle competition, and make it harder for Americans to afford the cost of living."
Keep ReadingShow Less
Sierra Club Urges Dem Senators to Uphold Biden Clean Vehicle Standards
One campaigner from the green group decried the "dangerous attempt to roll back progress on climate, clean air, and cleaner cars" by some lawmakers skeptical of the new EPA rules.
Apr 11, 2024
The Sierra Club on Wednesday launched a multistate digital ad campaign aimed at persuading seven U.S. senators—six of them Democrats—to back the Biden administration's already weakened tailpipe pollution standards for passenger cars and light-duty trucks.
The new campaign targets Sens. Bob Casey (D-Pa.), John Fetterman (D-Pa.), Tim Kaine (D-Va.), Mark Kelly (D-Ariz.), Kyrsten Sinema (I-Az.), Jon Tester (D-Mt.), and Mark Warner (D-Va.), who have been critical of the Environmental Protection Agency's (EPA) recently finalized federal clean vehicle standards.
"The Sierra Club urges all senators to protect their constituents from toxic vehicle pollution and support these clean car standards that will save families money and give car buyers more choice," Will Anderson, the green group's deputy legislative director, said in a statement.
"The popular clean car standards are the latest commonsense action by the Environmental Protection Agency to tackle our nation's most polluting sector—transportation—and they work," Anderson added. "Trying to undo them is a dangerous attempt to roll back progress on climate, clean air, and cleaner cars that will benefit communities across the country."
Some of the ads are custom-tailored to individual lawmakers. Responding to Fetterman's recent criticism of the new EPA rules, one of the videos argues that "repealing this standard would harm Pennsylvania's growing clean energy economy, undermine efforts to clean up our air, and hurt children and seniors with asthma and other respiratory problems."
"We urge Sen. Fetterman to protect Pennsylvania families who will benefit from this lifesaving standard that will create jobs and give car buyers more options—not Big Polluters and their Republican allies who want to roll back climate progress," the video adds.
The EPA estimates that the new standards will prevent 1 billion tons of greenhouse gas emissions and provide $13 billion in annualized net benefits for consumers and the climate. While some environmentalists have hailed the new rules as the strongest ever of their kind, others argue they don't go far enough.
Dan Becker, director of the Center for Biological Diversity's Safe Climate Transport Campaign, last month claimed that "the EPA caved to pressure from Big Auto, Big Oil, and car dealers and riddled the plan with loopholes big enough to drive a Ford F-150 through."
The new Sierra Club campaign launched the day after a federal appellate panel upheld the Biden administration's 2022 decision to preserve California's strict vehicle emission standards, which have been adopted by 17 states and the District of Columbia. California's mandate is more stringent than the new EPA standards, which set no quotas for zero-emission vehicle sales.
Keep ReadingShow Less
Most Popular