The Recognition and Impact of Dynamic Pricing with ESL Technology on the Purchase Decision of Consumers in Stationary Grocery Stores: Current Findings and Experiment

Abstract

AbstractThe basic concept of dynamic pricing (DP) has been around for a long time (e.g., gas station prices). To maximize profit, it is now commonly known as an algorithm-based automatic price adjustment tool on eCommerce platforms (e.g., flight tickets or hotel prices). DP is based on time or demand through the invention and implementation of the electronic shelf label (ESL) technology in stationary retail. It creates new opportunities for the physical contribution channel. This potential is also the focus of this study by precisely dealing with the recognition and impact of DP with ESL technology on consumers’ purchasing decisions in stationary grocery stores. Our literature review includes current research on DP, ESL technology, price behavior, and price fairness. According to the first review, no single experiment on ESLs combined with DP in stationary grocery stores, and only a few general studies on ESLs exist. Thus, an experimental design is proposed to research customers’ post-purchase reaction/acceptance of ESLs in stationary grocery stores and customers’ recognition and perception (perceived price fairness) of DP adjustment strategies. Participants purchase twice an ethnically defined shopping cart in a supermarket by applying ESLs, whereby the second time, the prices of several products from the shopping list are slightly increased. The goal of the between-participants post-test-only control-group experiment design is to identify the technology's potential for stationary grocery stores. Equity theory deals with price fairness and is used as the primary consumer behavior model for price adjustments. The results depict a design for experimental research on DP with ESL technology. The system should function as a pre-study and discussion base for further research on this topic. A draft of the experimental setting (instruction sheets, evaluation plan, digitally designed survey) is already provided as a basis for further improvements. With the proposed execution plan, third parties can further test the experiment on feasibility and applicability in the described experimental setting by using technology (virtual reality, augmented reality) or on different industries or other groups.