[Drakim]

That's the ideal dream scenario, but in reality the market isn't that efficient. Lots of markets gouge their customers and due to power imbalances the customers can't really do anything about it. The free market solution to this is just generally to let people suffer.

[HDThoreaun]

> the market isn't that efficient

The grocery market is. Margins sit at 1-2%, there is absolutely no reason to believe dynamic pricing would change that. Grocery stores are one place where free markets have created incredible consumer surplus because competition is high.

[estearum]

I don't see why consumers wouldn't just pick the stores that have better prices for them. Why would they know/care/need to know what the prices are doing for other people?

[elil17]

The issue is that consumers who can pick better stores will get better prices, while those that can't will get gouged. Imagine someone who works multiple jobs and only has time to shop at the grocery store closest to them.

The algorithmically-driven store will start by randomly showing them some random prices and seeing how they respond. If they are willing to accept high prices, the store will keep charging them more. If they leave the store and go somewhere else, the store will revert to lower prices. The store will discriminate against people who won't comparison shop for whatever reason (busy, limited access to transport, rich enough that they don't care, etc.)

However, the store's extra margins won't lead to lower prices for other consumers, even in a fully competitive market. Raising prices for consumers who won't comparison shop will do nothing to change the marginal cost of serving a consumer who does, so this won't change the competitive dynamics for those consumers and they won't see lower prices.

[estearum]

There's nothing unique about dynamic pricing in this situation except more efficient price discovery which I'm not sure is a bad thing for anyone.

> Raising prices for consumers who won't comparison shop will do nothing to change the marginal cost of serving a consumer who does

Of course it would. In a competitive environment (which grocery stores are), this excess capital gets reinvested into beating the competition.

[elil17]

> In a competitive environment (which grocery stores are), this excess capital gets reinvested into beating the competition.

That's not true though. Excess capital does not necessarily get reinvested in an efficient market. If that were the case, companies in relatively efficient markets would spend a very small portion of their free cash flow on dividends and share buybacks, which is not the case.

Let's look at Kroger specifically: https://ir.kroger.com/news/news-details/2026/Kroger-Reports-...

Of $7.2B free cash flow in 2025 they spent $3.9B on capital expenditures and about $3.6B on dividends and buybacks (those numbers don't add up because of things like loans, sale of assets, and stock issuance).

Additionally, even if companies in competitive markets did reinvest all their excess profits from personalized pricing, the benefits would only accrue to consumers that the algorithm thinks are price-sensitive.

[Throaway199999]

You can't see you mean? Consumers pick things that are reasonably convenient, achievable and known to them. These things are all subject to exploitative tactics by grocery stores.

There's also price-fixing, which famously occurred in Canada recently.

Not to mention cornering a market like Walmart would and removing consumer choice entirely.

[estearum]

All of these are separate issues from dynamic pricing

[Throaway199999]

You were not asking about dynamic pricing. You were asking why you weren't able to see the reason that consumers don't always find & choose the cheapest option. The person you were responding to was explaining the unethical realities of food retailers. There's no reason why these would disappear with dynamic pricing.

[estearum]

No, the entire conversation is about a change toward dynamic pricing. My comment about pricing is that dynamic pricing doesn't change the competitive dynamic between retailers. You are chiming in and saying "well there are other competitive/noncompetitive dynamics at play," which I agree with and never disputed and am not talking about.

[Throaway199999]

What GP is saying is that dynamic pricing will not lead to lower prices because retailers will not lower their prices, they will collude.