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Privacy analysts read Walmart's two pricing patents as item-level markdown software
Walmart was granted patents in January and March covering automated markdowns and price recommendations. Reviewers at the Future of Privacy Forum and the ACLU told Fortune the filings set item prices, and Walmart says it does not price by customer.
The Investor · Invest desk
What happened
- Walmart received a patent in January for a system that could automatically adjust markdowns on its website based on predicted demand and how shoppers respond to prices.
- A second patent, granted in March, uses past purchases to forecast demand and recommend item prices, with a description listing purchase records that could include payment methods and customer IDs.
- A Walmart spokesperson said patents are one way the company protects its ideas and that a patent does not mean a technology is in use today or will become a Walmart product or service.
- Walmart said in March that roughly 2,300 US locations had digital shelf labels, and that employees approve price changes, typically outside shopping hours.
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Why it matters
- capability Digital labels take the per-tag manual work out of a markdown, so how often a store reprices becomes a software setting fed by a demand forecast instead of a staffing question.
- exposure If the FTC writes its disclosure duty around the data that went into a price, a filing that lists customer IDs among purchase records puts the largest US retailer inside the rule even with uniform shelf prices.
- contradiction Shoppers on social media read the filings as surveillance pricing, while the two analysts who actually went through them described item-level systems, so the public fear and the documents are pointed at different things.
A patent tells you what a company wanted to protect. Fortune noted that it does not tell shoppers whether the company ever put the invention to work [5], and neither Walmart filing establishes whether the system it describes is running [4].
The piece of this with a date attached is the hardware. Walmart said in March that it expected digital shelf labels chain-wide within the next year [15]. Fortune published on September 22, so roughly six months of that window remained [1]. The company also said prices are the same for everyone in a given store regardless of demand, time of day, or who is shopping [16].
Two people who read the filings for Fortune landed in the same place. Jameson Spivack of the Future of Privacy Forum said patents are "not necessarily a great indicator" of what a company actually intends to use [6], and described Walmart's two as "systems that are adjusting prices at the item level rather than at the individual level" [7]. Jay Stanley, a senior policy analyst at the ACLU, did not see prices set for individual shoppers either, and said the practice of predicting demand and setting profitable prices is like "econ 101" [8]. Stanley pointed to loyalty programs and online shopping as what made it easier for retailers to know who their customers are and track what they buy over time [9].
Walmart's own privacy notice says it collects purchase histories along with what customers browse and search on its site and app, and that the information may be used to tailor ads, product recommendations, and promotions [10]. A spokesperson told Fortune that "Walmart doesn't charge different prices based on a customer's personal information or purchase intent or history" [13]. Both of those can be true at once: the shelf price is uniform, the promotion is not, and what a shopper pays is the shelf price minus whatever promotion reached them [2].
So there are three ways this runs, and only one of them needs a patent. The systems stay unused as defensive intellectual property. Or Walmart turns on item-level markdowns, prices move more often, and everyone in the aisle still sees the same number [16]. Or the targeting already happening in the ad business, where Fortune has reported Walmart uses customer data to aim advertising [11], starts deciding which shopper gets which promotion against that uniform price. I'd expect the third, because that machinery is built and the shelf price does not have to move for it to work. The patents are not the evidence: Fortune reported the filings do not show Walmart charging people different prices based on information about them [17]. What would settle it is a promotion-level disclosure from Walmart, or an FTC rule that treats a targeted discount as a price.
What to watch
- Whether the FTC's disclosure trigger attaches to the data input, which would reach a system fed by customer IDs, or only to a price that visibly differs between shoppers.
- Walmart's next store count for digital shelf labels, measured against the chain-wide timetable it gave in March.
- Any Walmart statement on whether the March patent's purchase-record inputs, including payment methods and customer IDs, are in production.