dubious trend: “fair pricing” in America

An extremely important retail and technology trend is silently underway in America, which threatens to destabilize a lot of goodwill gained from technological leaps in the past two decades. It’s even challenging the foundation of America: equality and democracy.

The trend: retailers nationwide with loyalty card programs have amassed Big Data about their customers. They are using this data to target deals for profiled customers in such a way that the person standing next to you on the checkout line may be offered discounts that you don’t/won’t ever get, and vice versa.  Retailers, such as Kroger, Safeway, Amazon, Starbucks and others are analyzing each customer’s historical shopping behavior, and then cleverly varying prices in customized offers that are meant to increase purchases and profit (margin). This is essentially “regressive couponing”.

from transparent to opaque

These retailers are making assumptions about the shopper’s wealth and “household elasticity”. For every deal offered, there is a deal withheld. Retails are making as many decisions NOT to offer discounts because the shopper has a history of paying top-dollar for certain products. So, the machine is creating a form of “deal elitism”. What if I lost my job and am strapped for cash, but my historical shopping data will disallow me from getting better prices.? Hmmm, isn’t this a form of a sin of omission?

Sure, this kind of use of my personal data may “make me feel special and unique” and “thrilled that I’m getting advantages that others are not.” Afterall, that’s why I have Frequent Flier cards and a MoMa membership. And, what’s wrong with being rewarded for my loyalty, frequency and choices? As my friend Jurgen put it, “it allows me to create an ecosystem of brands and things I like.” But, the downside, I feel, outweighs the upside.

from democratized information to gated information

With the ubiquity of the Internet (and smartphones) we thrive on free and equal access to information 24/7/365. The democratization of information has possibly been the single BIGGEST catalyst for propelling civilization forward (obvious example: The Arab Spring). Equal access to information has leveled the playing field and made it possible for everyone to be enlightened and informed consumers and citizens. In addition, the open, free Internet has created “the commons, fostering a global culture of collaboration and sharing. Shared knowledge. Shared experiences. Shared creation. Shared problem solving.

But this technology is the antithesis of democratized information. This approach is all about “the uncommons.” And I don’t like it one gigabyte. Jurgen even suggested that it’s a form of “de-centralized power, whereby opaque and unaccountable corporations make decisions about what’s right and wrong for people.” We’ve made so many great strides in “out” and “open” in recent years: open-sourced, open-offices, open-minded, out-sourced, out-of-the-box, outward-bound, etc. This kind of “gated community” making and closed deal-offering seems like a step backward.

“fair” and “equal” are not the same

While reading comments and discourse around The New York Times article last week that highlighted this trend, I cannot help but be reminded of an argument often used in education: fair is not equal. When a student complains, “why didn’t I get what he/she got? It’s not fair!” teachers (like me) are trained to respond: “what’s fair isn’t everyone getting the same thing. To be fair, is to give to those who need. To be equal, is to give to everyone.”  This is analogous, except the retail corporation is the judge of who is needy and who is not. Yipes!

America is not a haggling culture, yet

In America we have a social contract with retailers that pricing is transparent and democratic in that everyone can access the price of goods and services. The price is the price, high or low. In American culture we don’t haggle for prices. Americans define themselves as being open and direct. Certainly, in haggling cultures, consumers expect that each consumer might get a different price, dependent on negotiation skills, relationship with vender, etc. But, Safeway is not a Souk in Dubai. And, I don’t want to negotiate (or price-doubt) each item in my grocery basket.

This trend doesn’t just impact the American retail landscape, but also the way our data footprints will be used for or against us.  Consumers, be wary. Personally, I’m cutting up certain retailer loyalty cards.  Retailers, please think very carefully about venturing down this slippery slope. It might leave the door open to competitors who come and provide goods and services to the coupon/pricing dispossessed.

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