Zohar Gilad runs Fast Simon, a company that helps retailers optimize their websites. Instead of offering different prices, they may display higher-value items for customers with a free buy purchase history and clearance items for bargain hunters. Targeted coupons for hesitant users also result in a personalized price under a different name, leading to a sale that might never have happened.
“For example, if you’re looking for something and haven’t bought it, you might get an email saying, ‘Hey, you have great taste.’ We saw you looking for black boots. “Here’s a 20 percent coupon,” Mr. Gilad said. “I think personalization, when done right, can be good and serve both shoppers and retailers well.”
Still, some retailers prefer the loyalty that can come from stable prices, even if it means sacrificing short-term profits. With its “Every Day Low Prices” approach, Walmart avoids coupons and rarely discounts anything. The practice “helps us earn the trust of our customers because they don’t have to chase sales and can rely on us to consistently offer low daily prices,” said Molly Blakeman, a Walmart spokeswoman.
Retailers also need to be careful to avoid the appearance of discrimination. The Princeton Review came under scrutiny when ProPublica revealed that Asian American students tend to pay more than other groups because they charge higher fees for test prep in certain ZIP codes. Researchers found that in Chicago, Uber and Lyft’s pricing algorithms resulted in higher fares in neighborhoods with more nonwhite residents. The companies said their prices are based on demand patterns and are not intended to discriminate.
The most important factor, said Erin Witte, consumer protection director for the Consumer Federation of America, is that shoppers understand the rules that retailers have set. Problems arise when there is an “information imbalance,” particularly when it comes to something as existential as food, which may have fueled the backlash from Wendy’s.
“If they feel like they can meaningfully engage in a price negotiation, everyone understands to some degree that a company is going to make money on a transaction,” Ms. Witte said. “But when you feel like you’re being subjected to price manipulation that you as a consumer have no access to and certainly can’t predict with certainty, then it just feels very unfair.”
Audio produced by Sarah Diamond.
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2024-04-06 09:03:37
www.nytimes.com
