Abacus | Will the AI dynamic pricing lead Hong Kong’s shoppers to virtual insanity?

Dynamic pricing has been a feature of retail markets since humans engaged in bartering, but when computers take over it moves to a different level

Consumer and producer price indices in China and Japan confirm what the Americans have researched – manufacturing margins in 2021 are hurting badly without it

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Customers at the wet market in Chun Yeung Street in North Point, Hong Kong. Photo: Sam Tsang

Published: 7:00am, 5 Jul 2021Updated: 7:08am, 5 Jul 2021

What we’re living in

Like many expats, I find shopping in Hong Kong bemusing. You never know what the price of an item is going to be, or if it is the right price. That has always been true of big-ticket items, which are priced according to demand, inventory and out-of-datedness. Prices are often very negotiable for a television or camera that is a year out of date or not quite the latest, highest definition. But it also seems to be true of the daily shop.

Price variance on basic supermarket items from week to week can be surprisingly large. I presume it’s based on inventory, as some “deals” for various items can halve the price. It’s one of the reasons I am wary of being a member of various rewards programmes and reluctant to hand over my full consumption profile – at a certain point they would get wise to the fact that Neil Newman will clear the next shelf of discount Cava at the weekend.

There has also always been a certain amount of dynamic, or rather arbitrary, pricing in wet markets. Without displayed prices, I get sized-up by the vendor wondering just how much I might be willing to pay for a bag of juicy lychees.

Of course, this is nothing new. Dynamic pricing has been a feature of markets ever since humans discovered bartering, as a buyer and seller will come to an agreement based on how they perceive their costs, the current market and each other. However, with computer technology and artificial intelligence (AI), the process is now changing.

A vegetable stall at a market in Beijing, China. Dynamic pricing has been a feature of markets ever since humans discovered bartering, writes Neil Newman. Photo: EPA

Things will never be the same

It was apparently the Quakers that some 150 years ago in their belief of fairness and equality came up with the idea of a price tag, with storekeepers employing a fixed-price system. Other shopkeepers copied the fixed-pricing as they saw the benefit of not requiring their shop staff to determine prices on the fly. With the price of goods from distributors and manufacturers relatively stable, and staff not needing as much training, retail stores could get bigger, allowing the arrival of supermarkets and hypermarkets. It was good too for customers, who now knew where they were with their shopping basket.