How New Store Pricing Trends Are Affecting Frugal Shoppers 

These days, more than ever, price-conscious consumers are keeping on top of emerging practices in marketing. Ever-changing store pricing trends have left frugal families inventing and adopting new cost-saving measures for the past three years, as we strive to continue to feed our family, without breaking the bank. 

But two new industry trends in pricing, which may appear innocuous, may not be as simple as paying a few more cents at the checkout. 

Why the sudden change?

First, let’s talk about why we are seeing a lot of emerging new store pricing trends. 

Simply put, in large part it’s because companies endured a huge loss of profits during the pandemic and the subsequent years of record-high inflation. In addition to this, throughout 2020 and 2021, service-based companies (like grocery stores) discovered that they could still fulfill customer needs while shifting to modern technology, like contactless payments and on-line ordering. 

This surge toward tech-based innovation has led to companies to look for new ways to use AI technology to sell more goods and services, while simultaneously making more profit. Meanwhile, post-pandemic conditions have left the average consumer adjusting their budget more frequently, anxious about inflation-driven rising prices and pivoting toward lower-cost products. 

In a June 2024 article, Bloomburg writer, Amanda Mull, explained the conundrum. “Corporations are in an era of recoupment. Brands and retailers, fresh out of ways to do more large-scale cost-cutting, are looking to goose profits by raising prices.”

This has created the perfect storm. These new pricing solutions, with the chief aim of making more money, will be neatly packaged and presented in a way that attempts to convince consumers that they are, indeed, benefiting by being offered a bigger package or a “special” discount. 

Pricing Tactic #1: “Stretchflation” 

Originating in Europe and slowly spreading to North America, stretchflation is a unique inversion of shrinkflation. 

After the pandemic, consumers quickly learned to recognize this store pricing trends. Although their 20-ounce box of raisin bran had shrunk to 16 ounces, the price had remained the same. The same held true for the 12-ounce bag of frozen corn, which had previously weighed in at a full pound. Simply put, we were all getting less product, but paying the same price

An article in The Clarion notes the core reason companies are moving to a new packaging and pricing: their previous strategies are no longer working. Unable to shave off any more expenses by using this tactic, manufacturers have invented shrinkflation’s new “cousin”, stretchflation. They are now offering you larger packages, but charging you proportionately more per ounce or gram. 

This means you may now find 16-ounce bags of your favorite frozen corn, but you are paying a higher price per ounce. If you are getting 20% more product, you may be paying 25% more at the checkout. Ultimately, the consumer, lured by the appeal of the familiar or the larger, has just paid more money for that product.

How not to be duped: Do the math!

Although most stores are widely required by law to post the unit price next to the item on the shelf, at times they don’t utilize the same unit. For instance, one box of cereal may be listed in ounces, while a very similar box is listed in pounds. It helps to compare items all in the same unit. 

Here’s a simple formula. Divide the shelf price by the unit measurement (ounces, pounds, quarts, grams, liters, etc.). The result is the unit price of the product. 

Here’s an example. The price for a three pound bag of oranges is three dollars. When you divide $3 by three (the number of pounds) you obtain $1 as the price per pound. If you divide $1 by sixteen, you can derive a unit price of $.06 per ounce. 

Pricing Tactic #2: Dynamic Pricing through Digital Price Tags

Although the technology for digital price tags has existed for at least twenty years, the implementation of this technology is becoming far more widespread. Mega-corporation, Walmart, who has already installed these new price tags in their Texas locations, recently announced their intention to roll out digital price tags in over 2000 stores by 2026.  

How and Why Stores Are Using Dynamic Pricing

On the Walmart corporate website, Daniela Boscan, Food & Consumable Team Lead, wrote, “Walmart stores have over 120,000 products on shelves, each with an individual price tag. Every week our stores support thousands of pricing updates for new items, Rollbacks and markdowns. Digital shelf labels, developed by Vusion Group, allow us to update prices at the shelf using a mobile app.” 

She noted that some of the benefits to associates include: “reducing the need to walk around the store to change paper tags by hand and giving us more time to support customers in the store.”

Real Life Examples of Dynamic Pricing

With digital price tag technology, either an actual person, or more often AI, can move prices up and down based on factors like the time of day, day of the week, how many shoppers are currently in the store, inventory levels, or the popularity of a specific product. 

Store loyalty cards have allowed manufacturers and retail stores to amass a huge amount of intel on the patterns and purchases of their shoppers. Corporations who have mastered the art of incentivizing customers to sign up for their loyalty card program are at the top of the pack when it comes to both profits and promotions. 

This is why Kroger probably knows that I stop by one of their locations every Sunday after church. I do this because markdowns in the produce department are completed right around noon. 

Since I have the Kroger app, which will track my location unless I specifically tell it not to, my phone could very well begin receiving special ads about that day’s targeted in-store products around 11:30am Sunday morning. Another not-far-fetched scenario is that the store AI would pair with my iPhone the minute I walk into the store and send me real-time offers while I stroll the aisles. 

Although store pricing trends such as these are intriguing in theory, the reality of an AI system (which feels more-than-a-little dystopian) may very well yield an overall negative customer experience. 

Why Dynamic Pricing Is Dangerous

The relationship between stores and customers has always been clear cut, but this new technology skews the expected norms. Companies produce the products and set the prices. Retail stores put the products on their shelves (with a mark-up) for us to buy. 

Prices are in print and can be found ahead of time (for the most part). If you aren’t satisfied with the amount, you know you may be able to pay a lower price by waiting for a sale or using coupons. Finally, you can tell your neighbor, friends, relatives, or the mailman about a great sale and they, too, can get the exact same product at that same price. 

With dynamic pricing, this entire system (which has worked for decades) is decimated. The power of the consumer to decide whether to buy based on prices and discounts will have little meaning. It also sets up frustration and anger because the person who shops on a different day of the week or time of day may be offered special deals, which you are not privy to. 

Finally, the “fraternity of frugality” cultivated in groups of thrifty-minded friends who share savings opportunities is no longer energized through communally passing along all the details about great deals. Manufacturers and stores should not underestimate the value of a customer base who feels an inordinate degree of loyalty to the company who not only meets their needs, but also does so at a fair price, with clear “rules”.

How not to be duped.

Don’t listen to your phone notifications. A pushed “deal” may not be a deal at all. Do your research and check prices online. If the prices in the store appear different, don’t be afraid to walk away. Patronize stores you trust and remember to always be kind to retail workers. They aren’t responsible for the use of AI and digital tags by their cooperation and may not be any happier about it than you are.

Our Predictions 

When it comes to store pricing trends, regardless of methodology (paper or digital) consumers will continue to expect standardized prices, especially on items which are on sale in the weekly flier. 

Stores who do not give customers the opportunity to create a specific grocery list before they walk in the store and know (within a few pennies) what they can expect to pay at checkout, will lose out. People will patronize stores who continue to offer them this advantage. 

Consumers will band together and figure out “workarounds”. Frugal people are smart with their money. They know how to take the time and do the math to determine how to continue to feed their family without overspending. They are flexible and unafraid of change and will look for new solutions to new pricing strategies. 

Although they do not begrudge companies the right to make a profit, customers will respect stores who consistently offer good deals (and throwing a coupon or two their way doesn’t hurt, either.) 

Your Turn!

What are your thoughts on new pricing tactics by stores? Do you have any concerns? Do you plan to adjust the way you shop? Tell us in the comments.

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