Is dynamic pricing coming to a supermarket near you?

Planet Money

NPR

News, Business

4.6 • 30.5K Ratings

🗓️ 6 March 2024

⏱️ 29 minutes

🔗️ Recording | iTunes | RSS

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Summary

Dynamic pricing is an increasingly common phenomenon: You can see it when Uber prices surge during rainy weather, or when you're booking a flight at the last minute or buying tickets to your favorite superstar's concert. On an earnings call last week, Wendy's ignited a minor controversy by suggesting it would introduce dynamic pricing in its restaurants, but the company quickly clarified that it wasn't planning on using it for "surge pricing."

One place you hardly ever see dynamic pricing? American supermarkets.

Why is that? Why shouldn't the prices for meat or bread or produce go down as they get older? Why does all the milk in the store cost the same, even when the "sell by" dates are weeks apart? Wouldn't a little more flexibility around prices be better for customers and help reduce waste?

Professors Robert Evan Sanders and Ioannis (Yannis) Stamatopoulus had similar questions. So they set out to discover what was keeping supermarkets from employing a more dynamic approach, and what might convince them it was time for a change ... in pricing.

This episode was hosted by Amanda Aronczyk and Nick Fountain. It was produced by Willa Rubin and edited by Keith Romer. It was engineered by Valentina Rodríguez Sánchez and fact-checked by Sierra Juarez.

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Transcript

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0:00.0	Support for NPR and the following message come from SAP Concur, a leading brand for integrated travel expense and invoice management solutions.
0:08.5	With SAP Concur solutions, you'll be ready to take on whatever the market throws at you next. Learn more at concur.com.
0:17.0	Heads up in this episode we mentioned Amazon, Whole Foods, and Walmart, all companies that directly or indirectly sponsor NPR.
0:25.0	This is Planet Money from NPR.
0:30.0	The other day, I got a call for my pal Amanda Aranchik.
0:34.0	Hello Nick, how are you?
0:36.0	I'm good. Where are you?
0:38.0	I am in my local supermarket.
0:41.0	Okay, why are you basettimeing me from the supermarket?
0:45.0	Good question. I came here not because I want to shop, but because I wanted to show you something that's been bothering me.
0:52.0	Ooh, I love a supermarket mystery.
0:54.6	Okay, this is a gallon of milk, and when's the sell-by date?
0:58.3	That's tomorrow.
1:00.4	That is tomorrow.
1:01.5	Okay, and look here.
1:02.4	What's the sell-by-date of this gallon of milk? Oh, that's a gallon I would buy. That's two weeks from now. Two weeks from now, and you know what is going on with these two gallons of milk? No. They're the same price. That, it's how it works, but when you put it that way,
1:19.6	that doesn't make very much sense. You're absolutely.
1:22.6	This makes no sense at all because one is very valuable,
1:24.6	it's going to last me for two weeks,
1:25.6	I'm going to be able to put in my coffee and my cereal.
1:27.8	The other one is going to go bad much sooner.
1:30.5	Imminently, I don't understand why they would be the same price there must be a better way
	...

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