AI and the Consumer

A humanoid robot pushing a shopping cart, while looking at products in a super market aisle

Illustration generated using DALL·E 2.

Price Fixing

There is a saying in English – the price of a thing is what it will bring – which basically means people will pay what they perceive the goods on offer are worth. The problem is, not all prices are negotiable, in supermarkets for example. But that doesn’t mean to say the owners of said supermarkets are inflexible when it comes to pricing, oh no. In fact, the moguls of the mega marts are very happy to play around with their prices, as long as the end result works in their favour of course. What we are discussing is something called ‘dynamic pricing’.

Once we have finished merrily twirling around the supermarket aisles checking things off our shopping lists and succumbing to the occasional impulse purchase, we inevitably find ourselves at the checkout, which may or may not be manned by a human being. Once our purchases have been duly scanned many of us will unthinkingly present our customer loyalty card and hey presto, hand over a huge amount of purchasing data to the supermarket.

Delicious data

All this delicious data will be fed into an analytics program that will spew out all kinds of information about such things as what time and days we shop, how often and what brand of toilet freshener, shampoo, baked beans, bread and cheese we prefer. Are we a sucker for good old buy 2 pay for three offers? The data will even tell them remarkably accurately if we are single, married, have kids, a dog, cat, or budgerigar. They can have a very good stab at where we are on the disposable income scale and quite possibly even when our wedding anniversary is (flowers), or when we celebrate a birthday (cards) and so much more.

Dynamic pricing

So what has this got to do with the prices we pay at the checkout? Well, quite simply, rather a lot. If the supermarkets know we like to buy branded products, do a weekly shop on a Friday after work, buy premium meats, cheeses, and wines, they can be pretty certain we are not that price sensitive, and probably willing to pay a little bit more for those things we love. The chances are then, that when we turn up on Friday at 6pm, the prices for some of our must haves are very slightly higher than they were on Wednesday afternoon; welcome to dynamic pricing. And it’s not just the supermarkets. E-commerce is even more seamlessly slick at making sure we pay what we deserve to pay. Think you paid the same for your train or plane seat as the person sitting next to you? Are you sure the people in the identical hotel room next to yours are paying the same price as you when you both check-out on the same day after an identical stay? Or your car hire, cinema seat, cup of coffee, or haircut?

The right price

Those sneaky little cookies are tracking your every move, trying to help you part with your hard earned moolah. And of course, some, or even many of you reading this, might just say it is the price we have to pay for convenience, and that it’s worth paying. I have no argument with that, but I would like to leave you with an alternative to the saying I started with, and it is this – the price of a thing, is what they think they can get you to pay.

Written by Ian Bowie