John Furner issued a letter to customers Friday (Sept. 25) arguing that such a practice would violate the company’s Every Day Low Prices (EDLP) ethos.
“Prices can change,” the letter said. “We lower them when we can pass savings along. Sometimes they rise because an item costs more to buy or transport. But using someone’s income, shopping history or moment of need to charge them more would violate the EDLP promise our business model is built on. We won’t do it.”
He differentiated the practice of personalized pricing from Walmart’s adoption of digital shelf labels, which Furner said ensures shelf prices match the price at checkout while saving associate times on swapping out paper price tags.
The CEO added that Walmart does not use customer conversations with its Sparky AI assistant to glean personal information and set a specialized price.
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“We’ve never used the relationships our associates have with customers to charge more, and we won’t do that with AI,” Furner wrote.
Furner’s comments come amid government pushback against the practice of personalized pricing, also known as surveillance pricing. This week, Maryland will become the first state in the country to impose an outright ban on certain personalized grocery prices.
Maryland Gov. Wes Moore signed the Protection From Predatory Pricing Act into law in April. Since then, Connecticut and New Jersey have adopted their own restrictions.
The Federal Trade Commission (FTC) in August warned that companies who use customers’ personal data to set prices could be breaking the law.
“The FTC does not have the legal authority to ban personalized pricing in all circumstances, but businesses that fail to tell consumers how their personal data is being used to set a price may be in violation of the FTC Act and other laws we enforce,” Andrew Ferguson, the commission’s chairman, said in a news release at the time.
As covered here soon after, the FTC has said there is limited research into the effect of personalized pricing. It is also unclear how widely businesses are using it. However, existing data indicates that increasingly sophisticated personalization typically increases corporate profits while making consumer benefits less likely, the commission said.
“While the FTC’s legal authority is limited, Congress can impose a comprehensive prohibition,” the report said. “A pending Stop AI Price Gouging and Wage Fixing Act would restrict certain algorithmic pricing and wage practices while protecting publicly disclosed group discounts and voluntary loyalty programs.”
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