Dive Brief:
- Safeway, Kroger and Canada's Metro grocery chains are among the early adopters of new pricing technology that use algorithms to determine what prices individual shoppers should pay.
- The algorithms sort through data about a shopper—what they've bought before, how frequently they replace it, etc.—and the select a price that is aimed at maximizing the likelihood of a sale. The price is sent to the shopper in the form of an electronic coupon that is tied to their store account or smart phone.
- At Safeway, the personalized price program is called "Just 4 U." It rolled out nationally in 2011. Today it accounts for 45 percent of sales.
Dive Insight:
The technology behind personalized offers is still quite new—but it doesn't feel like it, does it? We've already grown completely accustomed to Amazon knowing what books we might like to read, to ITunes knowing what songs we want to hear, and to a half-dozen or so retailers who can pretty accurately predict just when our children have outgrown the pair of jeans we ordered for them. But there's still something a little strange about this new world when it enters the grocery store.
Maybe it's the sense that food shopping is supposed to be slow and marked by serendipity. We don't buy zucchini because it's been 6.5 days since we last bought zucchini (or at least we shouldn't.) We buy it because we wander through the produce aisle and we see it and we think of a recipe. Or we see it and realize that the zucchini we bought last time has probably gone bad by now because we never got a chance to cook it because we had spent so much time online buying books, music and clothing that was advertised in an email we got that was just so perfectly on target that we knew we just had to buy right now.
Or maybe it's the sense that in another few years we'll own a smart refrigerator that will know when it's running low on milk and it will talk to the personal pricing algorithms itself. We won't be needed at all. They'll work it out between themselves. They'll have a relationship—like the one we once had with the family that ran the corner store. And suddenly we'll have become superfluous to ourselves.