Surge Pricing – coming soon to a supermarket near you?

News surfaced this week about the possible introduction of surge pricing in Australia. The story centred around supermarkets but when you think about it, we already do have surge pricing here. Time-of-day tolling is in place on some roads where the toll is higher at peak times and when you think bout it, the petrol cycle could also be considered surge pricing as could airline tickets.

But back to the supermarkets. Surge pricing involves digital price tags which can display different prices at different times of the day.. What it means is, a litre of milk could cost you $1.50 at 9am on a Wednesday and then jump to $2.50 at 9am on a Thursday as more shoppers armed with their pension and welfare cheques do their weekly shopping.
  
Whilst most of us recognise and tolerate surge pricing when it comes to thing like fruit and vegetables, which may be out of season and imported, I doubt the public will be happy about supermarkets capitalising on the busiest shopping periods or worse, popular items.

Speaking on the Daily Drive show this week, Pippa Kulmar - Retail analyst at Retail Oasis said it might not be all bad though. Consumers could benefit from retailers matching a competitor’s price instantly from a central location rather than individual stores have to adjust paper price tickets.

Which brings us to regional pricing. I’ve never understood how supermarkets can justify selling groceries cheaper in certain suburbs than others. Whilst driving through an affluent suburb the other day, I noticed the price of petrol was $1.35 a litre. The same chain had fuel at $1.19 as I drove through lower socio-economic areas.

Pippa was more optimistic than me, believing the move will put downward pressure on the larger players, but the two big supermarkets are unlikely to introduce a pricing system that reduces profitability are they?

Little has changed in the supermarket space in the past 20 years except for maybe online and home delivered shopping and with Amazon and other players entering the Australian market, maybe we shouldn’t be surprised that supermarkets are embracing new tech.

It remain to be seen what impact surge pricing will have on suppliers who will be unlikely to have any say in the price of their goods unless, as Pippa says, they have massive brand strength.

Coles might need to re-do their TV ads!

”Down, down prices are down... but only after 12pm Saturday”