Allow me to venture a prediction. If AI dynamic pricing is adopted by corporations, especially grocery store chains, it will cause just-in-time supply-chain chaos and profits to be unpredictable by two or three standard deviations outside the bell curve. All of which will then result in stock and bond market carnage worse than 2008. Moreover, this kind of short-sighted innovation, just the kind Silicon Valley adores, is untested and untrustworthy and will cause a societal meltdown that will make the results of Hurricane Katrina in New Orleans look like Sunday school, possibly ending in a near-famine if adopted. Finally, it’s the kind of intellectual irresponsibility that will propel already Burj Khalifa levels of stupidity out into the cosmos, ultimately ushering in chaos and revolution.
nobody
In other industries, ‘AI-based’ pricing is just a very, very thin figleaf to disguise price fixing arrangements built on laundering inter-vendor conspiracies through an ‘AI’ operated by a third party.
Think of ‘AI-based’ pricing as little more than another form of regulatory arbitrage rather than an impending apocalypse.
David
Its volubility may also play havoc with the derivatives market as who would want to make a bet on the future value of some object if the AI is setting this future price for reasons that may well make no sense. This would be looked upon very harshly by those finance people at Wall Street.
Jefferson Hamilton
Sounds good, then?
Feral Finster
OK, I’ll bite. What leads you to this conclusion?
Chaos effects as supply-chain pricing becomes short-term unpredictable?
Oakchair
“AI” is primary just a marketing term used to distract and wow people with bullshit about how technologically advance, and cool the newest AI product is.
“AI dynamic pricing” is the same as “dynamic pricing.” It will base prices on what the corporations want them to be. IE it will do what corporations already do, destroy the environment, control workers and screw consumers to enrich the ruling class.
Just like ChatGpt tells you what the ruling class wants you to believe, which is what search engines and the TV already does.
Of course at some point screwing everyone over will cause the whole system to crash. At some point the masses will rebel in a blood orgy. At some point the environment will collapse. At some point the masses of disabled and sick will reach a critical mass and a systemic fall in living standards will occur.
The ruling class is psychopathic, they are high on their own supply, and they believe their own propaganda, but they aren’t stupid. There are reasons they’ve been engaging in more and more censorship, financial control, spying, travel controls, punishing dissenters etc. Those reasons have nothing to do with ending racism, protecting you from terrorism, improving public health, or your benefit.
Geoffrey Dewan
All of the above.
I noticed this effect awhile ago when trying to book a flight to the East Coast If I went to a different page for a second or two, when I came back it went up $10.
Lather, rinse, repeat.
Willy
Blame the algorithm. I bet that’ll be the standard line for your friendly customer support A.I. Butlerian Jihad, anyone?
Maybe that’s how I’ll vote going forward. Who’s the lesser evil when it comes to defending the ruling class against Butlerian Jihads?
StewartM
Finally, it’s the kind of intellectual irresponsibility that will propel already Burj Khalifa levels of stupidity out into the cosmos, ultimately ushering in chaos and revolution.
Hey, NO ONE, but no one, does stupid like we do!
different clue
I think the AI dynamic pricing being predicted here is the minute-to-minute or even second-to-second changes of prices for individual/family use retail goods in supermarkets and other last-point-of-sale settings. If the shelf-mounted digital display gave one price when the shopper took the item off the shelf and then the same shopper is charged a last-second AI-driven “surge price” or custom-tailored ” higher price for you in particular, sir” at the checkout, that shopper will really see it. And feel it.
It will elicit the same resentment from some which robo-checkers elicit from some now. When people discover that the new retail slogan is ” Never the same price. Never.” , they will take what personal and ad hoc group-wildcat countermeasures they can . . . either evasive or assaultive.
bruce wilder
Already shoplifting is its own pandemic, no?
I am genuinely afraid of self-checkout — will Kroger have me arrested six months from now because the algorithm thought the way I passed the peas from right to left was sus?
SocalJimObjects
@bruce wilder, it seems self checkout might be going the way of the dodo, https://www.bbc.com/worklife/article/20240111-it-hasnt-delivered-the-spectacular-failure-of-self-checkout-technology
Purple Library Guy
Dynamic pricing could save brick-and-mortar stores. It’s very hard to do dynamic pricing in an actual store–if the price they’re charging you at checkout is not the price on the label, people will rebel–they will argue and yell, they will shoplift, they will demand a law. The self checkouts are just annoying, but dynamic pricing in the physical setting will be perceived as theft; nobody will stand for it. It will probably not be worth it for actual stores to implement this.
But dynamic pricing online is another story. When you’re looking at the screen, you can’t tell what the price was a short time ago or what the price is for someone else two blocks away looking at the same product. And there’s nobody to yell at and no way to shoplift it. So people will live with it. But, they will gradually get this feeling of malaise as they compare notes, and the perception will grow that online shopping is a ripoff and a scam. People may well shift back to the physical stores that seem honest by comparison.
Carborundum
AI-driven dynamic pricing, specifically in grocery chains, is already here and has been for at least the last two to three years. I spent some time a while back talking to people working in some of the big players in this industry trying to establish the impact on CPI and came away convinced that it is definitely having a significant impact, though it is difficult to assess exactly now much as there is a fair bit of masking from current methodology. My conclusion was that we were going to have to adopt a much more involved methodology and/or compel summary reporting from pricers if we wanted measures to remain as accurate as historical norms.
However, I don’t believe that AI pricing will itself drive supply chain disruptions. Pricing and supply chain aren’t actually that well integrated in my experience. If anything, I would argue that pricing and supply chain are actually becoming less coupled than they have been. People in the business world have woken up over the past five years or so to the importance – and potential – of pricing. They are devoting a lot more attention to it than they used to and seem to be viewing it as a kind of free profit they can wring out of the system.
To be clear, I don’t have any difficulty believing that there will be AI driven disruptions, but that will be primarily due to the direct use of AI in scheduling and logistics rather than indirect pricing effects. I’ve already been regaled with some AI scheduling fluff-ups that would be hilarious if not true (staff and resources double and triple booked without the “managers” realizing, etc.). Both scheduling and logistics are tougher problems than people realize and managers’ ability to recognize risks associated with any solution much lower* than people realize.
We’ll see a lot of areas beyond these where managers, being told that there is no perfect algorithm for a problem, will throw AI at it (frequently against engineering advice) without realizing that the approximations we currently have are very likely to be significantly superior, particularly in terms of resiliency. (Canada may actually be more vulnerable than many jurisdictions in this regard, due to the low profile of Industrial [where things like scheduling should live] relative to Electronic [where AI does live] engineering.) Welcome to the land of over-fitted models run amok…
* There are two types of people in the world; those who accept an estimate at face value and run with it and those who first want to know how the estimate was generated. In the current environment, management skews heavily to the former rather than the latter.
Dan Kelly
WELCOME TO STOP-N-SHOP. HAVE YOU SCANNED YOUR FREQUENT SHOPPER CARD? PLEASE MOVE YOUR…BANANAS…TO THE BAGGING AREA. STOP! UNIDENTIFIED ITEM IN THE BAGGING AREA! PLEASE REMOVE ANY ITEMS AND….PLEASE WAIT FOR ASSISTANCE. WELCOME SHOPPER! HAVE YOU SCANNED YOUR FREQUENT SHOPPER CARD? PLEASE ENTER YOUR PHONE NUMBER…ENTER THE ITEM NUMBER OR SCROLL THROUGH…UNIDENTIFIED ITEM IN THE BAGGING AREA!!! HAVE YOU SCANNED YOUR FREQUENT SHOPPER CARD? STOP! PLEASE WAIT FOR ASSISTANCE.
Stop-n-Shop has this creepy robot-thing that glides around the store beeping all the time. It will actually get right next to you as you’re shopping and just hover there, beeping. It’s like it’s sensing you or something. I rammed my cart into it the other day. Gently. Somewhat.
At Shop-Rite, they have the regular ‘coupon’ discounts that you receive by simply scanning your shopper card or entering your phone number that it’s linked to. Fair enough. But now they have additional ‘digital’ coupons that require either their phone app or the extra step of using one of the two or three kiosks in the store in order to get the discount.
There are multiple layers of technology between seemingly all human doings and interactions now.
When I worked at various supermarket jobs over the years I always had a resistance to learning all the silly numbers associated with the fruits and vegs. To this day, bananas are 4011 and certain yellow peaches are 4403. That’s all I remember, and that’s all I care to remember.
Aren’t little stickers on individual pieces of food an indication of human insanity? Why would we create scarcity around something as basic as food? There should be overflowing bushels of fresh fruits and vegs from as close by as possible.
Mary Bennet
I have learned to always, always ask for and examine a paper receipt at all stores. That gets me on camera with receipt in hand, in case someone wants to accuse easy target Ms. Scruffy Nobody of shoplifting and reminds me how much I spent on what.
What I have seen is not prices that change from shelf to register, but clever ways of masking the shelf price, signage not directly underneath the item to which a particular sign refers, large Sale signs slightly displaced from the item which is actually for sale, and such like tricks.
Dan Lynch
Depends on whether there is competition. If store “A” has dynamic pricing but store “B” across the street has old fashioned fixed pricing, then we can choose to shop at store “B.” To win back our business, store A’s dynamic pricing will have to be a better deal than store B’s fixed pricing.
The more realistic application for dynamic pricing will be to save labor when there is a sale or a price increase. You will no longer need an employee to go out and manually change the price tag.