4 ms·
Grocery stores have tiny margins and that's great. Let's keep it that way, it benefits all consumers. One way to prevent them from expanding their margins is to
by elil17 5mo ago
Grocery stores have tiny margins and that's great. Let's keep it that way, it benefits all consumers. One way to prevent them from expanding their margins is to ban so-called "dynamic pricing".
- estearum 5mo agoThis is hilariously first-order-effects thinking... If any store used dynamic pricing to expand their margins, the others would just do the same and compete away those margins once again, with the marginal gain being handed back to consumers. Dynamic pricing on personal data is bad I think, but temporal dynamic pricing is actually very good for everyone and I hope it doesn't get thrown out by some reckless legislation-writing.
- Drakim 5mo agoThat's the ideal dream scenario, but in reality the market isn't that efficient. Lots of markets gouge their customers and due to power imbalances the customers can't really do anything about it. The free market solution to this is just generally to let people suffer.
- estearum 5mo agoI don't see why consumers wouldn't just pick the stores that have better prices for them. Why would they know/care/need to know what the prices are doing for other people?
- Throaway199999 5mo agoYou can't see you mean? Consumers pick things that are reasonably convenient, achievable and known to them. These things are all subject to exploitative tactics by grocery stores. There's also price-fixing, which famously occurred in Canada recently. Not to mention cornering a market like Walmart would and removing consumer choice entirely.
- estearum 5mo agoAll of these are separate issues from dynamic pricing
- Throaway199999 5mo agoYou were not asking about dynamic pricing. You were asking why you weren't able to see the reason that consumers don't always find & choose the cheapest option. The person you were responding to was explaining the unethical realities of food retailers. There's no reason why these would disappear with dynamic pricing.
- estearum 5mo agoNo, the entire conversation is about a change toward dynamic pricing. My comment about pricing is that dynamic pricing doesn't change the competitive dynamic between retailers. You are chiming in and saying "well there are other competitive/noncompetitive dynamics at play," which I agree with and never disputed and am not talking about.
- Throaway199999 5mo agoWhat GP is saying is that dynamic pricing will not lead to lower prices because retailers will not lower their prices, they will collude.
- elil17 5mo agoThe issue is that consumers who can pick better stores will get better prices, while those that can't will get gouged. Imagine someone who works multiple jobs and only has time to shop at the grocery store closest to them. The algorithmically-driven store will start by randomly showing them some random prices and seeing how they respond. If they are willing to accept high prices, the store will keep charging them more. If they leave the store and go somewhere else, the store will revert to lower prices. The store will discriminate against people who won't comparison shop for whatever reason (busy, limited access to transport, rich enough that they don't care, etc.) However, the store's extra margins won't lead to lower prices for other consumers, even in a fully competitive market. Raising prices for consumers who won't comparison shop will do nothing to change the marginal cost of serving a consumer who does, so this won't change the competitive dynamics for those consumers and they won't see lower prices.
- estearum 5mo agoThere's nothing unique about dynamic pricing in this situation except more efficient price discovery which I'm not sure is a bad thing for anyone. > Raising prices for consumers who won't comparison shop will do nothing to change the marginal cost of serving a consumer who does Of course it would. In a competitive environment (which grocery stores are), this excess capital gets reinvested into beating the competition.
- elil17 5mo ago> In a competitive environment (which grocery stores are), this excess capital gets reinvested into beating the competition. That's not true though. Excess capital does not necessarily get reinvested in an efficient market. If that were the case, companies in relatively efficient markets would spend a very small portion of their free cash flow on dividends and share buybacks, which is not the case. Let's look at Kroger specifically: https://ir.kroger.com/news/news-details/2026/Kroger-Reports-Fourth-Quarter-and-Full-Year-2025-Results-andAnnounces-Guidance-for-2026/default.aspx https://ir.kroger.com/news/news-details/2026/Kroger-Reports-... Of $7.2B free cash flow in 2025 they spent $3.9B on capital expenditures and about $3.6B on dividends and buybacks (those numbers don't add up because of things like loans, sale of assets, and stock issuance). Additionally, even if companies in competitive markets did reinvest all their excess profits from personalized pricing, the benefits would only accrue to consumers that the algorithm thinks are price-sensitive.
- HDThoreaun 5mo ago> the market isn't that efficient The grocery market is. Margins sit at 1-2%, there is absolutely no reason to believe dynamic pricing would change that. Grocery stores are one place where free markets have created incredible consumer surplus because competition is high.
- throwaw12 5mo ago> If any store used dynamic pricing to expand their margins, the others would just do the same and compete away those margins once again, with the marginal gain being handed back to consumers. How would you do it if pricing is dynamic and changes every day? By the time competitor finds out about the price, you might have already reduced it, making it look like theirs is more expensive even after they applied discount.
- estearum 5mo agoBecause the exact same is true in reverse
- danlitt 5mo agoDynamic pricing based on personal data is not even a market, let alone a perfectly competitive one. Temporal dynamic pricing can mean almost anything, so might be ok (early bird lunch deal) or pure evil (bottled water now costs $100 because there is lead in the tap water).
- estearum 5mo agoYour evil case is not evil The point of pricing water to that level is that it would induce other people who have access to bottled water to bring it to that market, as is desirable
- Throaway199999 5mo agoYou assume that other people can simply bring bottled water to market & compete with discoverability and access to customers with established players? Or is your point that all people in a market with leaded water should be paying $100 for pure water because it is inherently worth that much per the market.
- estearum 5mo agoNo, I assume that if anyone can bring bottled water to market, they should have a strong incentive to do so whenever there is a strong need for more of it.
- Throaway199999 5mo agoBut they (everybody) can't. Bringing bottled water to market requires a clean source, rights to acquire it, and a manufacture & distribution network. Plus retailers. As well, these things are often blocked to newcomers because of existing deals with big players.
- estearum 5mo ago> But they (everybody) can't. Bringing bottled water to market requires a clean source, rights to acquire it, and a manufacture & distribution network. Plus retailers. I didn't say everybody. I said anybody who can. What you describe is exactly why it's important to have an incentive for the people who do have those resources to employ them towards getting bottled water to this lead-poisoned region...
- wernsey 5mo agoWhat happens in practice that there are only so many grocery stores where consumers can choose to shop thanks to corporate mergers and lax antitrust enforcement. So if all of them raise their prices at the same time then those consumers are out of luck. Now technically it would be illegal for the grocery stores to collude in price fixing like that, but they'll hide behind the fact that all of them will buy their surveillance pricing data from Google [1]. Google will tell all of the competitors exactly how much they can charge you for your eggs, and you'll get the same price everywhere. [1] https://www.thebignewsletter.com/p/will-google-organize-the-worlds-prices https://www.thebignewsletter.com/p/will-google-organize-the-...
- estearum 5mo agoSure, but none of this is related to dynamic pricing
- HDThoreaun 5mo agoIf they could do that they wouldve already. Grocery prices skyrocketed during covid yet margins for grocers remained bottom of the barrel.
- Rury 5mo ago> the others would just do the same and compete away those margins once again, with the marginal gain being handed back to consumers This is an assumption that doesn't necessarily have to happen. Some markets remain uncompetitive, otherwise you would see every market collapse to 0 margins if this were always true.
- estearum 5mo agoSure but dynamic pricing doesn't change anything about that.
- elil17 5mo agoThe point of personalized pricing, which is what this bill addresses, is to identify consumers who won't shop around and give them higher prices. You can't compete that away because the consumers being hurt aren't sensitive to competition (for example, they don't have a car and therefor can't get to a different grocery store). It's an inherently anti-competitive practice. I agree that temporal dynamic pricing might be good in some circumstances, but this bill doesn't ban it.
- estearum 5mo agoAnti-competitive doesn't mean "benefits from lack of competition."
- elil17 5mo agoRight, anti-competitive practices are where a business tries to limit competition. And dynamic pricing is anti-competitive because businesses are essentially algorithmically identifying customers whose business they don't need to compete for, and then charging them non-competitive prices.