Grocers see sense for custom pricing

PLEASANTON, Calif., Aug. 10 (UPI) -- Several U.S. grocery store chains are trying customized pricing based on shoppers' behavior to try to encourage spending and boost their margins, analysts said.

The pricing model – already in Safeway and Kroger stores -- is expected to extend to other grocery chains and, over time, could supplant standardized price tags, The New York Times reported Friday.

Even though use of personal shopping data, based on information gleaned from those customer loyalty card swipes, could raise privacy concerns among some shoppers, retailers said they're betting most people will accept the trade-off if it means a better product price.

"If our consumer information is right, personalization is really a consumer desire right now, not so much a consumer fear," said Michael Minasi, president for marketing at Safeway, based in Pleasanton, Calif.

Others are less enthused, the Times said.

Joseph Turow, a professor at the Annenberg School for Communication at the University of Pennsylvania, said shoppers should be wary because pricing at grocery stores and other retailers is not transparent enough and "there's a sense of fairness that's derailed here."

Turow pointed to his 2005 survey in which most adults said they didn't know retailers could legally charge different prices, and more than 90 percent said they would be upset if their grocer charged different prices to different people within the same hour.

Retailers said the foundation for individualized coupons and pricing already has been laid on sites such as Amazon.com, which hawks custom offers with varying prices, the Times reported.

Cincinnati-based Kroger has been sending its frequent customers specialized coupons with the help of dunnhumbyUSA, a consumer research firm.

"It comes down to understanding elasticity at a household level," said Stuart Aitken, dunnhumbyUSA chief executive officer.