Walmart’s expansion of digital shelf labels has suffered a setback after New Jersey became the first US state to temporarily halt the introduction of the technology.

Governor Mikie Sherrill signed the Fair Price Protection Act, which introduces a one-year moratorium on retailers installing new electronic shelf labels while officials examine their impact on shoppers and retail workers.

The law also bans “surveillance pricing”, where businesses use shoppers’ personal information (including their location, purchasing history and online activity) to charge different customers different prices for identical products.

Existing electronic labels can continue to be used, repaired and replaced during the moratorium. Traditional loyalty schemes and customer discounts will also remain permitted.

The legislation comes amid growing concern that digital shelf labels could allow supermarkets to change prices rapidly according to demand or connect pricing decisions with data held about individual shoppers.

However, retailers insist the technology is designed to improve pricing accuracy and reduce the amount of time staff spend manually replacing paper labels.

Walmart defends digital labels

Walmart, which is rolling out the technology across its US estate, said approximately 2,300 of its shops were already using digital shelf labels and that it expected them to be installed across its entire chain within the next year.

The supermarket giant said its labels operate through a closed system and do not contain cameras or microphones or collect information about shoppers.

It added that prices remain the same for every customer in an individual store, regardless of demand, the time of day or who is shopping.

Walmart said staff review and approve price changes through a central system, with updates typically made outside shopping hours to keep shelf prices stable throughout the day.

The retailer also claimed the technology could reduce a price-changing process that previously took several employees days to complete to just minutes.

Digital labels can additionally help workers locate products when replenishing shelves and picking items for online orders.

Unions raise jobs concerns

The United Food and Commercial Workers union backed New Jersey’s restrictions, arguing that rapidly expanding the technology could harm customers and put retail jobs at risk.

The union urged other US states to introduce similar protections against AI-powered pricing and the automation of tasks traditionally carried out by store employees.

Research into the technology has offered little evidence that electronic labels have resulted in widespread surge pricing.

A five-year study of prices at an unnamed US grocery chain found almost no increase in temporary price rises after digital labels were introduced. Discounts became slightly more common during the same period.

The dispute comes as UK supermarkets also accelerate their adoption of electronic labels. Morrisons is rolling out the technology across its entire supermarket estate, while several other grocers are testing or expanding similar systems.

New Jersey’s intervention could increase pressure on retailers to demonstrate that digital labels are being used to improve store operations rather than introduce personalised or demand-led pricing.

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