Shoppers in the UK may soon encounter more variable pricing in grocery stores as retailers increasingly adopt technology that allows prices to adjust in real time based on demand and other factors, according to a recent report from the Bank of England. The move toward dynamic pricing, already common in sectors like travel and online retail, could expand into supermarkets during the coming year.

A survey conducted by the Bank of England indicates that approximately one-third of companies plan to implement market-responsive pricing tools within the next 12 months, up from one in five the previous year. This approach uses algorithms, including artificial intelligence, alongside digital shelf labels to modify prices according to variables such as demand, store traffic, and competitors’ prices.

The Bank’s deputy governor for monetary policy, Clare Lombardelli, noted that digitalization has substantially lowered the traditional "menu costs" associated with changing prices, making frequent price adjustments economically feasible for retailers. While dynamic pricing is well established in online marketplaces and the travel industry—for example, hotel rates have shifted in response to technology from about 15% changing monthly in 2005 to roughly 80% today—groceries are seen as a potential new area for its application.

Currently, no major UK supermarket chains have implemented surge pricing, but several are rolling out electronic shelf labels. The Co-op leads in this area, already equipping more than 700 stores with the technology and aiming to extend it to over 2,300 locations this year. Morrisons and Waitrose have committed to installing electronic labels across all their stores, while Asda is adding them to around 250 Express outlets. Tesco and Sainsbury’s have also begun testing the displays.

When asked, most retailers did not clarify their future intentions regarding dynamic pricing. Morrisons stated its focus is on operational efficiency rather than demand-based price adjustments, and Waitrose asserted it has no current plans to implement dynamic pricing. The British Retail Consortium, representing supermarkets, described dynamic pricing as an operational matter for individual stores, without a formal policy stance.

Analysts acknowledge the immediate benefits of digital labels in streamlining price updates but recognize the potential for broader use of dynamic pricing. Clive Black of Shore Capital remarked that while such pricing could yield operational advantages, its impact on consumers versus shareholders remains uncertain. Consumer advocates have expressed concern over the lack of transparency and regulation. Martyn James, a consumer rights expert, warned of the risks if supermarkets begin employing dynamic pricing without oversight.

Black suggested that retailers might proceed cautiously with dynamic pricing, especially as regulatory bodies consider the fairness of varying prices based on location or other factors. He noted that price differences—such as between affluent and less affluent areas—could bring both benefits and drawbacks for shoppers, potentially resulting in higher costs in some stores balanced by lower prices in others.