What is surge pricing, how would it work for supermarket groceries and what companies already use the model?
RECENT reports suggest that supermarkets may soon "surge" their prices when there's high demand, just like Uber.
Here's what you need to know about surge pricing and how it would work in supermarkets.
What is surge pricing?
Surge pricing is also known as dynamic pricing, demand pricing and time-based pricing.
It is a pricing strategy that enables business to set flexible prices for goods or services depending on demand.
The model is common in several industries, including travel, public transport, hospitality and electricity.
Taxi-app Uber is known to use the tactic during busy periods – and recently came under fire for surging fares in the wake of the London Bridge terror attack.
They cancelled the higher pricing later that night but were slammed on social media for allowing their costs to rise after the attack.
How would surge pricing work in a supermarket?
It was recently reported that supermarkets could introduce surge-pricing in a move similar to Uber’s price changes on busy nights.
Chains including Tesco, Sainsbury’s and Morrisons are said to be considering the change in line with “e-prices”, which change with demand.
This would involve ditching traditional paper price tags on shelves for electronic versions - which could be easily and quickly changed.
Experts say this could lead to surge-style pricing in British shops – which already exists in the US and parts of Europe.
This could mean that the price of goods could regularly fluctuate - especially seasonal items like ice cream and burgers in hot weather.
Marks and Spencer tested out electronics food tags in some stores last year and offered special deals before 11am to encourage people to buy their lunch before the usual rush.
What companies currently use surge pricing?
Companies that already use surge pricing include Uber and various other travel businesses and airlines.
The model is also reportedly used by car rental businesses, Goodle Adwords, Airbnb, Expedia and online retailer Amazon.
