On a Thursday in early September, more than 40 strangers logged in to Instacart, the grocery-shopping app, to buy eggs and test a hypothesis.
Connected by videoconference, they simultaneously selected the same store — a Safeway in Washington, D.C. — and the same brand of eggs. They all chose pickup rather than delivery.
The only difference was the price they were offered: $3.99 for a couple of lucky shoppers. $4.59 or $4.69 for others. And a few saw a price of $4.79 — 20 percent more than some others, for the exact same product.
The shoppers were volunteers, participating in a study published on Tuesday and organized by the Groundwork Collaborative, a progressive policy group, and Consumer Reports, a nonprofit consumer publication. In tests in four cities across the country, nearly 200 volunteers checked prices on 20 grocery items on Instacart.
On item after item, they found significant differences. In a Target in North Canton, Ohio, some shoppers were charged $3.59 for a jar of Skippy peanut butter that others could get for $2.99. At a Safeway in Seattle, some people paid $3.99 for a box of Wheat Thins while others paid $4.89. And at a Target in St. Paul, Minn., some people were charged $4.59 for a box of Cheerios that others could get for $3.99.
“Two shoppers who are buying the exact same item from the exact same store at the exact same time are getting different prices,” said Lindsay Owens, executive director of the Groundwork Collaborative. “The data really backs up how extraordinarily pervasive this is.”
An Instacart spokeswoman said that stores on its platform set their own prices, and that some of them engaged in pricing tests to “learn what matters most to consumers and how to keep essential items affordable.”
“The pricing tests are short term, randomized and designed so that people may see slightly lower prices and some may see slightly higher prices, with the goal of helping retail partners understand consumer preferences and identify categories where they should invest in lower prices,” the spokeswoman said. (Meredith Kopit Levien, president and chief executive of The New York Times Company, is a member of Instacart’s board of directors.)
A Target spokesman said the company “is not affiliated with Instacart and is not responsible for prices on the Instacart platform.” Instacart said that during the period covered by the Groundwork study, it was “evaluating different approaches” to covering its costs but has since ended pricing tests on Target orders.
Safeway and its parent company, Albertson’s, declined to comment.
Groundwork’s findings are the latest example of how the notion of a single price, offered to all customers for a predictable period, is breaking down in the digital age. Companies are using sophisticated algorithms to adjust prices quickly in response to competitors’ offers and consumer behavior. “Dynamic pricing” strategies, in which companies raise prices during periods of intense demand, have spread beyond sectors where they have become familiar, such as air travel and ride-hailing services, to other parts of the economy, including restaurants and retailers.
“Prices are definitely more flexible across categories than they were 10 to 15 years ago, and that has to do with the rise of e-commerce and these technologies that have allowed firms over time to react more quickly,” said Alberto Cavallo, a Harvard economist who has documented the rise of algorithm-based pricing strategies. High inflation after the pandemic accelerated the trend, Mr. Cavallo said, by encouraging companies to adjust prices more quickly.
These strategies are making prices more volatile and less predictable for consumers, research suggests. And there is some evidence they are pushing up prices, at least in certain categories, at a time when the rising cost of living has emerged as a political point of contention.
Grocery prices are up more than 25 percent over the past five years and continue to rise faster than before the pandemic. In surveys, voters consistently rank food prices among their top affordability concerns.
Democrats including Senator Elizabeth Warren of Massachusetts have accused large food companies of price gouging. On Saturday, President Trump signed an executive order creating task forces to investigate possible price-fixing in the food supply chain.
In total, the Groundwork study identified price differences on nearly three-quarters of the items tested. The price tag for the full basket of 20 goods varied by about 7 percent within each store, a difference that could add up to hundreds of dollars over a year of grocery shopping. The organizations conducted smaller-scale tests on several other grocery chains on Instacart and found similar results.
Dianna Dance-Lewis, a volunteer shopper in the study, said she had become frustrated by the rising cost of groceries and by the sense that companies were playing games with prices.
“Over the last few years, I have just been, as a shopper, just kind of looking at the different signs and online prices when you purchase and just saying, Something’s not right here,” she said.
Some of the other participants seemed shocked when offered different prices for the same products, said Ms. Dance-Lewis, a middle-school teacher in Virginia. But she said the experience just proved something she already suspected.
“It confirmed all the craziness that I see,” she said. “It’s so unfair to the consumer.”
The Rise of Algorithmic Pricing
Online retailers have acknowledged running experiments to test how different prices affect sales. Instacart in 2022 acquired Eversight, a software company that uses artificial intelligence to help grocery stores and packaged-goods manufacturers set prices.
In a call with investors last year, Fidji Simo, Instacart’s chief executive, said the technology “helps retailers dynamically optimize their pricing both online and in-store to really figure out which categories of products a customer is more price sensitive on versus less price sensitive on and really adjust their prices based on that information.”
The Groundwork study found no evidence that Instacart was basing different prices on customers’ individual characteristics like income, ZIP code or shopping history. But there is little doubt that Instacart and other online sellers have the ability to do so. Companies including Delta Air Lines, Amazon and Home Depot have been accused of experimenting with such personalized pricing, only to retreat after consumer backlash. (The companies have in most cases denied basing prices on users’ characteristics.)
“It has happened in the past where the technology is used and then firms realize it’s causing more antagonization and costs to them than the benefit, and then they stop,” Mr. Cavallo said.
Instacart said that its pricing tests were “never based on personal or behavioral characteristics” and that prices “never change in real time, including in response to supply and demand.”
“Affordability has always been at the heart of Instacart’s mission,” the company said. “Retail partners control their prices on Instacart, and we work closely with them to align online and in-store pricing wherever possible.”
As companies adjust prices more frequently, however, it may become harder for customers to tell whether they are all being offered the same price. That could make it easier for companies to adopt personalized pricing strategies in the future.
The Federal Trade Commission sent letters last year to eight companies that offer pricing services, demanding information about how they use consumer data. The F.T.C. did not accuse the companies of breaking any laws. In a preliminary report issued days before Mr. Trump returned to office, the agency’s staff found that “details like a person’s precise location or browser history can be frequently used to target individual consumers with different prices for the same goods and services,” though it did not say how often such strategies were being used in practice.
Alexander Tolley, another volunteer in the Instacart study, said that even if most companies weren’t using customers’ data to personalize prices yet, he worried that they would soon.
“If they know how you shop, even on other items, they can use all that information to say, ‘We’re going to tailor the price to you,’” said Mr. Tolley, a 71-year-old retiree in Merced, Calif. “We’re going to get the maximum amount of money out of you that you’re prepared to pay and drain your pocketbook.”
Efficiency vs. Transparency
Economists say variable pricing doesn’t always harm customers. In some cases, the practice may lead to more-efficient outcomes, or even to lower average prices.
A pizza restaurant that can charge more on game days might charge less on a random Tuesday, for example. And many economists welcome the surge-pricing strategy pioneered by Uber as a way to align supply and demand — by enticing more drivers to show up to an arena where a concert is letting out, for example.
“Economics would say there are potential welfare benefits from this,” said Alexander MacKay, a University of Virginia economist. He noted that many pricing strategies resulted in higher costs for less price-sensitive — and therefore potentially higher-income — consumers, while lower-income consumers paid less.
Companies have long found ways to offer different prices to different customers, said Kevin R. Williams, a Yale economist who has studied pricing practices. Coupons, loyalty programs and senior discounts all allow some customers to pay less. Early-bird specials and happy hours attract customers during otherwise slow periods.
But such strategies are transparent and predictable. If different customers start being offered different prices, or prices start changing more frequently, price-sensitive consumers could struggle to ensure they are getting the best deal, Mr. Williams said.
“Opacity is a business opportunity,” he said.
New pricing strategies may also be contributing to inflation. In a paper published in 2018, Mr. Cavallo found that the use of algorithms allowed price shocks — in either direction — to travel more quickly through the economy, leading to more volatility in inflation.
In a paper published in July, economists at the University of Michigan and University of Virginia argued that algorithms can lead to higher costs for consumers because if companies know that their competitors will almost instantaneously match their prices, they have less incentive to try to attract customers by offering a better deal — a pattern the authors call “algorithmic coercion.”
Even if just one company in a market is setting its prices algorithmically, “it can raise prices a lot,” said Mr. MacKay of the University of Virginia, who was one of the study’s authors.
Ms. Owens of Groundwork said such studies supported what many consumers already intuitively believed: While companies may say dynamic pricing is a way to improve efficiency, in practice it drives up prices.
“This isn’t about managing scarcity or efficient markets,” she said. It’s about “pushing to figure out the maximum amount you are willing to pay and squeeze it out of you.”
Ben Casselman is the chief economics correspondent for The Times. He has reported on the economy for nearly 20 years.
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