The price you see online might not be the real price.
A new investigation found that Instacart was quietly running pricing experiments—charging different customers different prices for the same groceries at the same time.
This week, Paul and Goldy talk with Groundwork Collaborative Executive Director Lindsay Owens about how companies are using AI and massive data sets to run experiments on consumers—testing exactly how much each of us is willing to pay.
And if every shopper sees a different price, one big question follows: Do markets still work the way economists say they do?
Lindsay Owens is the Executive Director of the economic think tank Groundwork Collaborative and author of the forthcoming book, GOUGED: The End of a Fair Price in America.
Further Reading:
Same Cart, Different Price: Instacart’s Price Experiments Cost Families at Checkout
We Had 400 People Shop For Groceries. What We Found Will Shock You.
Gouged: The End of a Fair Price–and What That Means for Your Wallet
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Twitter: @Groundwork
Organizations developing policy on surveillance pricing:
American Economic Liberties Project
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Nick Hanauer:
The rising inequality and growing political instability that we see today are the direct result of decades of bad economic theory.
Goldy:
The last five decades of trickle-down economics haven’t worked, but what’s the alternative?
Nick Hanauer:
Middle out economics is the answer, because the middle class is the source of growth, not its consequence. That’s right.
Speaker 3:
This is Pitchfork Economics with Nick Hanauer, a podcast about how to build the economy from the middle out. Welcome to the show.
Paul Constant:
Hi, Goldy.
Goldy:
Hello, Paul.
Paul Constant:
The other day I was listening to the radio. Here in Seattle, we have a radio station. It’s called KEXP.
Goldy:
Wait, wait, this is like over-the-air, terrestrial?
Paul Constant:
Over-the-air.
Goldy:
It’s not a podcast? You have to listen to it live?
Paul Constant:
Exactly. I was listening to the radio- [inaudible 00:01:02]
Goldy:
What are you, 140?
Paul Constant:
Getting there. So I was listening to the radio and I noticed that I had a sort of calmness about me as I was listening to the radio, and I was thinking about what was going on. And I realized that I was enjoying the fact that I could passively listen to the radio without fears of an algorithm interfering. I realized, okay. I’m an Apple Music subscriber, and I generally like the service a lot, but if I stop paying attention to the playlist and it plays a couple of folk songs in a row and I don’t click down or switch to another song or something like that, Apple Music is just like trying to make all of my playlists sound like the inside of a Starbucks from like 1998.
Goldy:
Oh, back when Starbucks was at its best though.
Paul Constant:
Yeah, sure. Yes. Yeah, the peak Norah Jones era. But I realized exactly how taxing the algorithmic feed is on my thinking. I can’t listen to a song that I kind of don’t like because Apple is going to take that as consent to play more of it. And it’s just sort of exhausting, thinking about how all of these things measure … You search for a product, you search for shoes, and then for the next three months you’re getting ads about shoes, even though you already bought the shoes that you wanted. And it’s like a trail of garbage that just follows you around the internet. I’m starting to experience a sort of algorithmic burnout. I’m just sick of it. I’m sick of things trying to predict based on past behavior.
Goldy:
Man, I haven’t heard a manifesto like that since the Unabomber. I think what you need, Paul, is not just a shack out in Montana, but a shack built inside of a Faraday box.
Paul Constant:
Man, that sounds pretty good right now. I’m not going to lie.
Goldy:
I tease. I tease, but I’m with you on that. I am very suspicious. And it’s funny, and this gets of course to the topic of today’s episode, a report that came out in December that turns out, and I never knew this, I’d misunderstood this for a long time, that the invisible hand is actually an algorithm.
Paul Constant:
Oh yeah. I guess that’s true, isn’t it?
Goldy:
Right? It’s totally invisible and it’s setting market prices, it turns out.
Paul Constant:
You just blew my mind a little bit.
Goldy:
I’m not claiming that we are living inside a simulation. I’m claiming that, as we will learn from today’s guest, Lindsay Owens, the Executive Director of the Groundwork Collaborative, that in fact what prices that we think are just, “Well, that’s the price” and we pay it when you’re ordering through services like Instacart, they’re actually playing around with the prices to see how much profit they can extract from you. And that, in fact, different people ordering at the exact same moment, the exact same product from the exact same store are being charged very different prices, a conclusion to this report that I found both shocking and entirely unsurprising.
Paul Constant:
Absolutely. And that’s why I’m excited to talk to Lindsay, so let’s get into it.
Lindsay Owens:
I’m Lindsay Owens. I’m the Executive Director of Groundwork Collaborative. We’re a Washington DC-based economic policy think tank. And I’m also the author of a forthcoming book available for pre-order now, Gouged: The End of a Fair Price and what that means for your wallet.
Paul Constant:
Great. Well, thanks for joining us.
Lindsay Owens:
Thanks for having me.
Paul Constant:
I want to say first that I am a huge nerd for Consumer Reports. I read my parents’ copy cover to cover every month, and I didn’t feel like an adult until I had my own subscription. So I am curious how this project collaboration with Consumer Reports and More Perfect Union came together.
Lindsay Owens:
Yeah. Well, I should say I’m a huge, huge fan of Consumer Reports myself. Similarly, inherited that from my parents. Have also just been a real fan girl of the consumer movement and some of the lions of the consumer movement. I got a chance to work for Senator Warren when I first moved to Washington DC, and obviously she’s been so influential in that space, founding the Consumer Financial Protection Bureau. I once got to do a podcast that was a real highlight of my career with Ralph Nader. He actually joined from his landline phone. But yeah, so totally stand the Consumer Reports family, the legacy, all of it.
Consumer Reports runs this really amazing coalition devoted to understanding the role of technology on consumers, and in particular, how the price tag is really being eroded because of modern technologies. Groundwork was invited to join that coalition a few years back, and so they have become really just instrumental partners in our work. This particular collaboration and the idea behind the Instacart study, really came out of Groundworks’ now five years old body of research, looking at corporate earnings calls and understanding how corporations talk about prices, new pricing technology, and the future of pricing. And for several years, our focus was really on, quote-unquote, “greedflation,” how companies were able to pass along their rising costs, but then go for a little more. But beginning in 2024, we expanded the scope of that work and we started to be interested in pricing advisors, pricing consultants, and pricing tech companies, particularly AI pricing tech companies.
There were a number of those companies that really caught our eye. One early company was called Fetcherr. This is an Israeli artificial intelligence company that does the pricing science for Delta. And they got in a little trouble last summer when people learned from their earnings calls that Delta was exploring some pretty exploitative pricing practices thanks to this collaboration with Fetcherr. But one of the other companies that caught our eye was a company called Eversight, another AI pricing company that boasts about their ability to help companies run experiments on consumers, to help them determine exactly how much a consumer is willing to pay. And as we started digging into Eversight, we learned that Instacart had actually acquired Eversight in 2022. And so that became very interesting to us because we knew that Instacart had bought up an AI company focused on pricing experiments. We assumed that they purchased that company to run those experiments, and so we wanted to see if we could figure out by running our own experiment, just what the consequences of Instacart’s experiments were for consumers.
So that is a little bit of a long-winded answer, but that’s the origin here. An incredible team of researchers at Groundwork took that project to the Consumer Reports Coalition, and a really happy marriage was born between the three organizations. And of course, if you want to run an experiment, you need participants, and Consumer Reports has millions of members and they were able to recruit an amazing group of volunteers who were interested in helping us with this experiment.
Paul Constant:
Yeah, and it’s super interesting that it’s a live experiment. We read a lot of policy reports, but nothing quite like this. So I was wondering if you could walk us through the experiment, what you were trying to find out and how it worked, and why you did it this way as opposed to relying on their own data and things like that.
Lindsay Owens:
Yeah, look, I think it was elegant, but it was incredibly simple. We asked volunteers to log on, fire up Instacart on their computer. Then we said, “Hey, please select the following grocery items.” We picked about 20 items, breakfast items, lunch items, dinner items, store brand items, name brand items, pantry staples, produce. Wanted to get a little bit of everything. We asked them to get those items, put them in their cart, and take a screenshot of the prices. And we also asked them to pick up those items. Instacart is a grocery platform. And so when you log onto Instacart, you go shop at a specific grocery store. And so we had them shop at a grocery store, Target is one of them, pick up those items, and then take screenshots of the prices. And then from there, we took the screenshots and a team of really great research assistants at Groundwork Collaborative combed through all of the screenshots and inputted the prices into a spreadsheet so that we could analyze the data.
When we analyzed the data, what we learned is that Instacart’s experiments were incredibly widespread. Every single individual in the study was experimented upon. Every single item in the 20-item grocery basket was party to the experiment in some way, and price variation from item to item varied as much as 23%. This wasn’t a nickel here, a dime there. These were pretty big differences. Of course, a 23% price hike for one item might be a dollar or two, but we don’t buy one grocery item, we buy a whole basket of groceries. And we don’t go to the grocery store once a year, we go every week. And so when we added up the potential consequences of the variation in pricing from one item to the next across the entire year, we used Instacart’s own estimate of how much a family spends on groceries in a year, we found that these experiments could be costing some families as much as $1,200 a year. That’s as much or more than the price of rent for a one bedroom in a lot of major American cities. So, potentially a real serious contributor to the affordability crisis.
Goldy:
I’m confused here because I was taught that prices are set through an efficient and impartial equilibrium between supply and demand. And you’re telling me that they’re actually being set by price consultants and AI algorithms that are trying to maximize profits. How is this possible?
Lindsay Owens:
Yeah, this is a great question. And look, this ain’t your mama’s price tag. It is a whole new world. The rudimentary form of pricing, really since the price tag was invented, initially the Quakers actually brought us the price tag. They didn’t like haggling. They thought it was really unfair. They felt like every man should be treated equal under God and that should be also true in commerce. Then John Wanamaker says, “Hey, I think I’m going to borrow the price tag and put it in my Wanamaker’s department store” in 1874. And that gets us to the modern price tag in larger retail spaces. That was with us for a really long time. Companies set the price by looking at how much it costs to make something, thinking a little bit about what you’d be willing to pay, and then thinking a little bit about what their competitors were charging. They stuck a price tag on it and then they went about their business.
And today, pricing is a highly engineered science. There are armies of pricing advisors and pricing consultants and pricing tech companies. They scrape data from across the web to monitor competitor pricing in real time. They run experiments to test your maximum willingness to pay for a specific item. The worst-case scenario for Instacart is you get on the website and you start doing your grocery shopping, and then you get to your cart and you close your computer and you decide to go to the grocery store. So they are really working hard to figure out exactly how much they can charge you before you will decide to do your grocery shopping yourself. So it’s important for their business model to figure that out and calibrate that. So these experiments are worth a lot to them. They’re figuring out how much markup they can layer on top of the underlying retailers’ costs.
They’re not only doing that because they make profit from selling groceries, they’re also doing that because this is really valuable data that is also interesting to the retailers themselves. And so there’s a sort of data business that is, of course involved with all of these tech companies, and grocery tech companies are no different than any other tech company. By the way, brick-and-mortar grocery stores spend quite a bit of time as data companies. One of Kroger’s largest book of businesses is actually selling your data. You punch in your loyalty card when you go to Kroger, they learn a lot about the kinds of things that you like to buy. They have a lot of historical data because you go to the grocery store a lot. They actually make a lot of money. It’s their higher margin book of business than groceries is actually selling your data. Yeah.
Goldy:
Is discriminatory pricing strictly legal? I know they’re calling this an experiment. They’re experimenting. It’s not based on who you are necessarily. But if they could say, “This particular profile,” by whatever means they’re profiling you, “will pay more for this item and that profile will pay less, and so we’re just going to charge these people more and these people less,” is that legal?
Lindsay Owens:
Yeah, look, so there’s a whole host of price discrimination that’s perfectly legal, and we actually think of a lot of price discrimination as fine. A good example is there are senior discounts, there are AARP discounts, there are veterans and military discounts, there are all sorts of things that offer one price for one group of people and another price for another group of people. This type of price discrimination where they’re setting one price for you and one price for me is also often legal, particularly if the difference doesn’t come down to a protected class. There are certain forms of price discrimination that are illegal. We have strong protections against forms of price discrimination in the mortgage market, for example. You can’t charge one person a higher interest rate than another based on things like race or religion, for example.
But there is a lot of price discrimination, as you point out, that’s perfectly legal. And part of the reason that I think people are paying attention to new forms of pricing, whether it’s the pricing experiments in the Instacart study or a topic that’s getting a lot of attention recently called surveillance pricing, this idea that companies spy on you, learn characteristics about you, and then use those characteristics to set a price for you, people are interested in it because we do need new policy solutions. And there are a host of states who are pursuing legislation to eliminate and ban this practice, and there are some proposals at the federal level as well.
Goldy:
Yeah. But there’s a big difference between transparent pricing, like discounts, like getting a senior discount, that’s published, we all know, and “Oh, we’re not going to tell you, but we’re charging you 10% more because we’ve determined you’re willing to pay 10% more.”
Lindsay Owens:
Yep, and that’s exactly what the legislation says. Look, transparent, broadly applicable, discounts by groups are totally fine. You can have a Memorial Day mattress sale, you can have a senior discount, you can have an early bird discount, you can have a happy hour. What you can’t do is charge me more than you because you’ve taken a peek in my wallet.
Paul Constant:
So building this out a little bit, if shoppers can’t see the same prices, if I’m not shopping Instacart on Goldy’s phone, do markets still work the way that we understand them to work? Comparison shopping encourages competition between retailers. Does that eliminate competition? Is that where we’re going with all this?
Lindsay Owens:
Yeah. It has completely upended shopping as we know it, and I would argue given the role of consumption in our economy, it has completely upended the economy as we know it. You are exactly right that comparison shopping is a bedrock of how we think about competition and fairness in commerce, and this has eroded our ability to do that. Fair and transparent markets are important. Honest markets are important. When people ask me what they can do to avoid this, I always hesitate to give an answer because I do really think it shouldn’t be up to us individually as consumers to duck and dodge and bob and weave and try to beat the machine. But at the same time, until lawmakers address this, consumers do have to fend for themselves in this Wild West of pricing.
And one thing that is interesting is, it is no longer enough to comparison shop across brands. You now need to comparison shop within brands. Which is to say, check out what the prices in the brick-and-mortar store versus online. Check out what the price is online versus in-app. Check out what the price is when you’re logged in versus when you’re not. Ask your spouse sitting next to you on the couch to log in and see if they get the same price as you. Ask your roommate to fire up Uber and see if they get a better price than you. That is the kind of comparison shopping that this new world of pricing has forced upon us, and it’s one that is quite dystopian and I think we’re really due for a correction here.
Goldy:
Are they playing the same sort of games on the other end of this with the Instacart shoppers, where one might be getting X amount compensation and somebody else is getting a different amount for the same task?
Paul Constant:
Oh, you mean the employees, not the …
Goldy:
Yes, the employees. The people. Because I saw this with an Uber driver, where he actually asked me, because he can’t see it anymore, what I’m being charged. And I was just going from downtown DC to National Airport, and it was a $20 ride and he was only being paid $5.
Lindsay Owens:
Yeah, so surveillance pricing is a form of algorithmic price discrimination, and we also see algorithmic wage discrimination. There are a number of really smart legal scholars who’ve been looking at this for quite some time. Veena Dubal is the foremost among them. But yes, we absolutely do see algorithmic wage discrimination where, just as companies are interested in figuring out the maximum amount you’re willing to pay for an item, they’re also interested in figuring out the minimum amount they can pay a worker for a shift or a ride. And it is the flip side of the same coin, but for companies, this is great. It is a way to both drive down their costs and drive up their revenue. So it’s a win-win for them, especially for companies who do this on both sides of the ledger, like your Ubers, who can deploy both algorithmic price discrimination and algorithmic wage discrimination.
Goldy:
Yeah. I’m convinced that when I’m at … I never take it, but I always check it now. I’m convinced when I get into the airport, the further I am away from the Uber pickup, the cheaper it is. And as I in distance get closer, the price seems to rise. So you get off the plane, “Oh, it’s only $40.” But by the time you get your bag and you get there, it’s now $70. And I’m almost certain they’re just geotracking me at that point. I just want to be clear because I’ve never used Instacart. If I’m using Instacart to shop at Target, I’m being billed by Instacart. Target’s not getting a piece of this, right? Or are they?
Lindsay Owens:
Well, so this is interesting. You’re being billed by Instacart, yes. But through the course of our study, one of the things that we learned, and Consumer Reports is a very reputable journalism outlet, and so they sent the retailers that were part of our study the study and said, “Hey, would you like to comment on this?” and gave them time to comment before we published our report. And we learned some really interesting things. One thing we learned is that Instacart does partner with a set of retailers directly, and so those retailers and Instacart are party to these experiments together. We don’t know exactly what the contours of that relationship is, but we know they have a formal experimental relationship. There were a set of companies who were in cahoots with Instacart in these experiments.
There were other companies, and Target was one of them, who responded back to us and said, “Hey, we actually don’t run these experiments.” And so then we had to go back to Instacart and say, “Hey, Instacart, Target says they’re not doing this.” And what we learned, because Instacart disclosed this to us when caught red-handed, is that Instacart was scraping target price data and using it in their experiments. And Instacart’s experiments on Target were designed to assess how much margin Instacart could take on top of the Target grocery basket. So they were really looking to see what can you layer on top of the Target shopper if you’re Instacart, before they walk? Interestingly, Instacart said that that was a temporary experiment-
Goldy:
Oh, of course.
Lindsay Owens:
And that they had since stopped that experiment, and we just happened to be running our experiment in the middle of their experiment on Target. So that was really interesting.
Paul Constant:
[inaudible 00:23:37]
Lindsay Owens:
I’m still sort of waiting for a reporter to get more information out of Target about exactly what was going on there. But as we like to say at Groundwork at the time that we found this out, “The girls were fighting.” There was something going on with Instacart and Target there and we never really got all the way to the bottom of it. Yeah.
Goldy:
So if regulators were to get them under oath, what are the key questions you think they should ask?
Lindsay Owens:
So there actually are a number of folks who are pursuing this. As we know, the Federal Trade Commission opened an investigation or a probe into this shortly after our study launched. This year, Tish James, the Attorney General in New York, sent Instacart a letter asking for a whole host of follow-up information. And so it’s too early to know what they’ll find, but we know a few things. The first thing we know is that Instacart actually stores all of the prices that they display. And we know this because the company actually looked at our dataset and verified that we had all the prices right. And it makes sense if you think about it as a large pricing lab. If you’re running a lab, you’re collecting data and you’re archiving and indexing and saving your data and your specimens. So we know that they have all this data. I think it’s a very interesting dataset for regulators to take a peek at, particularly regulators with subpoena power. So that’s one thing.
We know one thing that attorneys general have been interested in, is understanding the role of, in this case, a kind of platform monopoly like Instacart that’s working across many other retailers, and whether or not Instacart’s position as a platform monopoly of sorts could be resulting in some pricing similarity, some conversion of pricing across different retailers. That would obviously be a real problem because you could have something that looks like tacit collusion as retailers’ prices start to get more and more similar. This is something where we’re quite worried-
Goldy:
Like that rental at-
Lindsay Owens:
Yeah.
Goldy:
Yeah.
Lindsay Owens:
Like what people were worried about with RealPage, this is also something that I personally am very worried about as the chatbots start shopping across multiple retailers, does Google via Gemini’s commerce arm start to have the ability to coordinate price across the economy, across competitors? So that’s something that I think retailers should be really interested in. I think you raised this interesting question about what regulators might be able to find out about Instacart shoppers or workers, gig workers. So lots of interesting questions here. Instacart has some relationships with SNAP, so it’d be interesting to know what’s happening there with SNAP recipients. And there are a number of members of Congress who’ve started to take a peek into that, and there have been some oversight letters there too. So lots of remaining questions.
But I would say more so than getting a full forensic autopsy of Instacart, the question that I’m more interested in is, where else is this happening? We got a victory in the sense that Instacart agreed to stop algorithmic pricing experiments, but we didn’t get a policy victory, so this is still going on, we assume in many other settings.
Paul Constant:
Speaking of policy victories, if you had a magic wand and could redesign the rules for how prices are set, what would you change?
Lindsay Owens:
Yeah, we have a lot of ideas here. We’re a big fan of the concept of one fair price, right? One item, one price. Two people shouldn’t pay different prices for the same item at the same time. That seems really straightforward to us. You can accomplish that in a few ways, including by banning the practice of surveillance pricing. And we’ve been helpful in developing legislation along those lines with partners like the American Economic Liberties Project, the Economic Security Project, tech equity. Obviously, Consumer Reports has been really influential, and their coalition’s work on that is really great. Just this week, actually, we saw a new bill introduced in New Jersey to take this on at the state level. There are a dozen states looking at this and moving this way as well.
I’m interested in some curbs to dynamic pricing. I think high frequency dynamic pricing has taken on a life of its own. Initially, we would see dynamic pricing mostly when you’re trying to ration scarce resources, plane tickets, concert tickets, things like that. Now we’re seeing Las Vegas casinos are varying the price of sunscreen in their sundry stores. This to me just seems totally unnecessary. The New York Times op-ed section did a really fun video around Thanksgiving, and they proposed something that I thought was really interesting, which was this idea of changing the price at a set time. So at 6:00 AM the prices change, and then all day long companies have to compete with each other on price. And that gives consumers a little certainty if they’re doing price checks or comparison shopping throughout the day. Don’t know a ton about how that works in practice, but was really interested in the idea and have been thinking a little bit about what it would look like to put something like that in place.
So I think there are a lot of options here, but of course surveillance pricing, dynamic pricing, they’re not the only way in which shopping has been upended. We know all-in pricing, junk fees, subscriptions, e-commerce is really a series of landmines for consumers and there’s a lot to take a look at on the pricing front.
Goldy:
How about transparency? Transparent pricing. I hate using all of these gig companies because it’s not just I feel like I’m being taken advantage of. I don’t want to take advantage of the workers. And I’d feel a lot more comfortable if I knew exactly what I was being charged for.
Lindsay Owens:
Yeah. Yeah. Look, I think transparency is a really useful first step. New York State actually passed a law requiring companies to let consumers know if the price is set by an algorithm using their data. And so that is something that you would now see if you were firing up your Uber app in New York because of course Uber is always using your data because they’re using your location, which is how they get a car to you. So that is something that New York has now. That law has only been in effect for a couple of months, so it’s a little too early to tell what kind of impact it’s having on the market. But disclosure can be helpful when consumers have a lot of choice and they can go elsewhere. But in some cases there are only a couple companies, both of them are using algorithmic pricing, knowing that they do so is infuriating, and not being able to work around it is even more so. So I think disclosure is a useful first foothold or step, but I’m more interested in prohibitions and stronger enforcement. Yeah.
Goldy:
Yeah. I’m old. I still look at the, even if it’s online now, the weekly circulars from the supermarket to see what’s on sale that week, and know whether I’m buying from Safeway or Kroger depending on that particular week. And once they publish that price, that’s the price.
Lindsay Owens:
Yeah. And look, we have very little competition in the grocery sector left. Four large grocery chains have two-thirds of the market. It’s Walmart, which is America’s largest grocer now, it’s Costco, it’s Kroger, it’s Albertsons. We almost had three. Kroger and Albertsons tried to merge. The Biden administration blocked that merger last year. But when we have limited concentration in the grocery sector, we can expect all sorts of abuses of pricing power. There was a really incredible example that the team at the Institute for Local Self-Reliance uncovered earlier this year where they ascertained that Walmart and Pepsi Frito-Lay had a sweetheart deal whereby Pepsi Frito-Lay was cheaper at Walmart stores, but the sweetheart deal required that Pepsi Frito-Lay not offer its discounted promotional pricing anywhere else, which in effect meant that small businesses all had to offer Pepsi Frito-Lay products at higher prices than Walmart. And so, all sorts of problems emerge in concentrated markets where firms have pricing power. And it’s not always high prices across the board. Sometimes it’s unevenly competitively advantaged and disadvantaged prices.
Goldy:
Why do you do this work?
Lindsay Owens:
Oh my gosh. Look, I’m a real materialist at heart, and I believe that the inequality that is rampant in the United States is a problem for our economy, but it’s also a problem for our social fabric. I think the more we can build an economy where average consumers and workers can have some economic stability but also have better wellbeing, the better. And so we spend a lot of time at Groundwork trying to propose policies that take on problematic and corrosive concentrations of corporate power and lift up the wellbeing of consumers and workers.
Goldy:
So Paul, given your opening rant about Apple Music collecting data on you, you feeling any more comfortable after talking to Lindsay?
Paul Constant:
Well, no, in fact, I am feeling even more paranoid, especially we didn’t really talk about it, but the fact that stores now use e-ink price tags means that I could literally encounter a different price in the same store while there physically at some point in the future. It’s horrifying. It’s horrifying.
Goldy:
Yeah, let’s just talk about how dystopian this is because there’s this thing in the US about, “Oh, we need to be careful about the government spending too much money and going into debt, because then we’re going to get hyperinflation just like those garbage countries where you walk into the store at 9:00 AM and it says it’s $5, and by the time you get to the counter, it’s $7. And oh, that’s a future we don’t want.” And meanwhile, that could be happening right now without any inflation. They’ve just decided that since the time you picked up that grapefruit and the time you went to check out, “Oh, you’re willing to spend about 25% more on that. That’s the new price for you, personally.”
Paul Constant:
Just last summer, a grocery store economist bragged about the fact that grocery stores would be able to charge more for cold water in the summer and ice cream, and they could change the price based on the temperature outside at any given point during the day.
Goldy:
Right. I think it’s fun that you mention that, because Lindsay mentioned that Groundwork had been listening to these quarterly conference calls. And we all know, as prices were going up, that inflation coming out of the pandemic, the CEOs and other executives were literally bragging on the corporate calls about their ability to raise prices. They were bragging to investors about how they’ve been able to increase their margins and increase prices, largely because there was this now expectation that prices were going up and they were going to take full advantage of it. And now they are literally bragging about their ability to use algorithms and other tools to manipulate pricing on this individual basis that allows them to maximize profits. And that means to ordinary people like us to extract money from us and send it straight to their shareholders.
The idea that somehow the market is going to fix this, that, “Oh, it’s a free market. That invisible hand won’t allow this to happen, because if Instacart is going to manipulate prices to maximize profits, then its non-existent competitor is going to swoop in and charge everybody a lower rate.” We actually know that, in fact, in these duopolies and triopolis, whatever, these very concentrated markets, that there is a certain amount of collusion that goes on. In fact, Lindsay had mentioned the deal that Pepsi had with Walmart, but for decades, if anybody ever noticed, you walk into your supermarket and one week all the Coke products are on sale, and the next week all of the Pepsi products are on sale. And that’s a deal. That’s like, they’re buying the end caps, they’re paying this promo, and Pepsi gets 26 weeks of the year and Coke gets 26 weeks of the year and they never overlap. So that type of collusion has long gone on.
Paul Constant:
But it just gets very dangerous when they have the understanding of us by tracking us how to wring every single last penny out of us on every single product, exactly how much we’re willing to pay before we get angry and walk out of the store. That is dangerous knowledge for basically every single retailer, large retailer in the world to have about us. And we’re going to need somebody to intervene or else things are going to get a lot more expensive very quickly.
Goldy:
Either we need some sort of a regulation on this sort of pricing, or everybody has to be like me and be totally erratic and irrational, and therefore incapable of algorithms pegging.
Paul Constant:
When you walk without rhythm, so you don’t disturb the worm. Yeah. Yeah, I know. I don’t know. All I know is that that cabin in a Faraday cage sounds pretty good right about now, honestly.
Goldy:
Right. Well, if you want to read more about this, very, as I said, shocking but unsurprising report, we will provide a link to the show notes. Same cart, different price, Instacart’s price experiments cost families at checkout.
Freddy:
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