A new study shows that Instacart (CART), the popular grocery delivery app, uses artificial intelligence pricing tools that can make shoppers pay different prices for the same items from the same store. The study was done by Groundwork Collaborative, Consumer Reports, and More Perfect Union. They asked 437 people in four cities to add identical grocery items to their Instacart carts from the same store. The test included major grocery chains like Target (TGT), Costco (COST), Kroger (KR), and Albertsons (ACI).
TipRanks Cyber Monday Sale
- Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence.
- Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off
The researchers found that nearly 75% of the products showed different prices depending on the shopper. For example, at a Safeway in Washington, D.C., a carton of Lucerne eggs had five different prices. The total price for the same basket of goods could vary by about 7%, which Groundwork says could mean a yearly price difference of around $1,200. In response, Instacart said only a small number of its retail partners do limited pricing tests and that these do not use personal or behavioral data. Prices also don’t change in real time based on supply and demand, according to the company.
Instacart explained that the goal of these short-term tests is to help retailers understand how sensitive customers are to prices in certain categories so they can offer lower prices where it matters most. Still, the use of AI pricing tools has caught the attention of lawmakers and regulators. For example, New York State passed a law last month that requires companies to reveal if they use personal data to set prices. The FTC is also studying how businesses use AI in pricing. Meanwhile, Senator Ruben Gallego introduced a bill that would ban companies from using personal data to charge different prices for the same product.
Is CART Stock a Good Buy?
Overall, analysts have a Moderate Buy consensus rating on CART stock based on 13 Buys, nine Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average CART price target of $50.75 per share implies 9.5% upside potential.
