World-first Australian laws targeting supermarket price gouging came into effect July 1, granting the ACCC new powers to prevent excessive pricing by Woolworths and Coles—despite a previous report finding no evidence of the practice.
New Laws, New Technology
From July 1, new powers granted to the Australian Competition and Consumer Commission (ACCC) aim to prevent price gouging by supermarket chains Woolworths and Coles. The laws have been described as world-first. An ACCC report last year found no evidence of price gouging by the two supermarket chains.
Separately, retailers across Australia and New Zealand are increasingly replacing traditional paper price labels with digital electronic shelf labels (ESLs). This technology allows for instantaneous price updates across all in-store products.
ESL Adoption Details
Millions of ESLs have been installed over the past year. Woolworths has installed approximately 17 million ESL tags in over 600 Australian stores and 170 New Zealand stores, with plans to convert all its stores. Coles and Bunnings are conducting trials. Dan Murphy's completed installation in all 273 branded stores in 2024.
Retailers state that ESLs improve efficiency in price updates, reduce paper usage, and free up staff for other customer-focused tasks.
Pricing Concerns and Expert Views
Dynamic pricing involves businesses adjusting prices in real-time based on factors such as demand. Lisa Asher, a retail and supermarket expert at the University of Sydney Business School, stated that the laws protect consumers from dynamic pricing practices emerging overseas. She expressed support for expanding the laws to cover other major retailers.
"Algorithmic-driven dynamic pricing, often enabled by ESLs, allows retailers to adjust prices based on consumer behavior."
Asher noted that, in theory, prices could change with weather, time of day, or vary based on individual shopping patterns.
A further concern is the potential for personalized pricing, where AI systems might utilize personal data (e.g., credit history, location, buying habits) to predict the maximum amount an individual customer would pay for a product. Former ACCC chair Allan Fels expressed concern that digital tags could facilitate different consumers paying different prices for the same product concurrently in-store, which he considers unfair.
International Context
In the United States, unions and lawmakers have advocated for a ban on ESLs in large grocery stores due to concerns about facial recognition and AI enabling predatory pricing. An investigation identified that the online grocery app Instacart had charged some customers varying prices based on personal data.
Legal and Regulatory Framework
Australian retailers have not explicitly stated whether ESLs will lead to personalized in-store pricing. Legally, businesses can use surge or personalized pricing strategies if they do not mislead consumers or discriminate based on protected attributes.
New price-gouging laws effective July 2026 will prevent very large retailers from charging prices deemed "excessive" relative to supply costs. Current-generation digital tags are cloud-connected and incorporate Bluetooth or NFC technology, allowing for interaction with smartphones and the display of personalized prices.
Industry Outlook
Industry experts anticipate that digital price tags will make in-store surge pricing more common and enable a more sophisticated approach to personalization. They predict an increase in loyalty-member and personalized discounts to compete with online platforms.