By Tanya Peasgood, Head of Consultancy, Williams Commerce
Dynamic pricing may be second nature in sectors like travel and hospitality, but its seemingly impending arrival in supermarkets lands very differently. While booking with companies like Ryanair or Uber is discretionary, grocery shopping isn’t.
When the price of essentials fluctuates throughout the week, it creates disparity. A loaf of bread costing more on a Thursday evening than a Tuesday morning effectively introduces two tiers of consumer: those who can shop flexibly and those who can’t.
While retailers may position this as personalisation, without clear transparency around how prices are set, they’re asking for trust they haven’t earned. And in a category built on consistency and fairness, that’s a significant risk.
Pricing has always been a core signal of value and positioning, but dynamic pricing weakens that control. If prices fluctuate too often, or without clear logic, brands risk losing clarity in the shopper’s mind into perceptions of unfairness, whether they influence pricing or not.
Dynamic systems could enable more responsive, context-driven pricing that genuinely adds value. But the line between helpful and exploitative will be thin.
Gone is the role of price as a signal of brand value
We’re potentially moving into a territory where one of retail’s most enduring signals starts to erode. Price has always acted as a proxy for value, allowing consumers to make quick judgements about quality and worth without needing to interrogate every product. But all that changes when prices shift according to demand, location and context.
This could create a new kind of ambiguity. Is a higher price a result of inherent quality or a reflection of short-term demand? Is a lower price a genuine promotion or just the system recalibrating to drive volume?
That relationship between brand and value loosens and products that once commanded a premium because of perceived quality might appear expensive because an algorithm determined so. While others might look like bargains without any meaningful change in their underlying position. Over time, that shift risks moving consumer perception away from “this brand is worth more” towards “this brand costs more right now”, a far less powerful place to be when 77% of customers actively change their purchasing behaviour when prices increase.
If the prices move too often, it invites a different kind of scrutiny, one where consumers question whether they’re paying for intrinsic value or simply responding to a moment of heightened demand. In that sense, brands risk losing a degree of control, with pricing power shifting from brand owner to retailer system.
Simultaneously, dynamic pricing allows for far greater precision in how promotions are deployed, enabling constant testing across locations and rapid shifts in demand. In theory, it creates a more efficient system for both retailer and consumer. But in practice, it introduces a new challenge around perception. When prices are always fluctuating, the distinction between a promotion and adjustment becomes harder to read.
It’s the “DFS conundrum”. If everything is always on sale, then the very concept of a sale begins to lose meaning.
In that environment, the burden shifts back onto brands and retailers to provide meaning beyond the pound sign. If price can no longer reliably signal value, then it has to be communicated through positioning, storytelling and the overall experience that surrounds the product. Otherwise, we risk creating a marketplace where consumers are no longer asking whether a product is worth it, but simply whether now is the right moment to buy it.
When does dynamic pricing cross the line?
Dynamic pricing feels problematic when it loses its logic in the eyes of the customer. In categories like travel, fluctuation is expected and broadly understood, but in groceries there’s always been an implicit contract around consistency and predictability. When that contract is broken without explanation, price changes feel less like a reflection of context and more arbitrary.
This is especially pronounced when pricing appears to shift based on time or location in ways that consumers can’t rationalise. A lunchtime increase, followed by a drop in the evening, may make sense from a demand perspective, but it introduces a sense of unevenness in how value is distributed. The flexibility to shop around these patterns isn’t universal, and when pricing favours those with more time it creates a perception of inequality.
As patterns begin to emerge, consumer behaviour will inevitably adapt. Increased price checking, more deliberate timing of purchases and a willingness to split baskets across retailers are all natural responses once people sense there’s an advantage to be gained. If those patterns become predictable, they may even be tracked and amplified externally (I’m looking at you Compare the Market), creating a feedback loop where shoppers begin to game the system rather than trust it.
The entire model relies on customers believing that pricing is being applied fairly and transparently. Without clarity and consistency in how changes are communicated, dynamic pricing risks undermining confidence in the retailer rather than specific brands. And once that trust is weakened, it’s far harder to rebuild than it is to optimise a pricing model in the first place.
