Prices yoyo-ing according to demand, availability or even weather has become the norm for some big retailers overseas. But will New Zealanders stand for it?

Would you pay more for a jacket if everyone else wanted it too? What about buying the very last pair of some sought-after jeans, if the price rose due to scarcity? Would you swallow a higher price for a sweater because you lived in sub-zero climate? And how would you feel seeing a jacket suddenly discounted for you alone? 

These are all examples of dynamic pricing – where prices change according to factors like product availability, consumer demand and competitor activity. In many ways, it’s nothing new: we encounter dynamic pricing every day at the petrol station. Air New Zealand, meanwhile, has defended its use of dynamic pricing amid public outcry over expensive, fluctuating fares, and hotels in Auckland have been criticised for raising prices during high-demand periods.

Dynamic pricing is not necessarily a bad thing, though: Lisa McNeill, an expert in consumer psychology at the University of Otago, points to Recycle Boutique’s fixed time-based model of dynamic pricing: anything unsold after four weeks is discounted by 25% for two more weeks, then, if it still hasn’t sold, by 50% for another week. As this is set out clearly to sellers and buyers, it’s “far more preferable, from a consumer point of view, as there is transparency built into the model”.

What’s changing the game, as it is in almost every other sector, is AI. AI-powered dynamic pricing is deployed by mammoth international retailers like Amazon and Temu. In the UK, Debenhams Group announced last year it had “implemented AI at scale” allowing for “real-time, automated pricing” with its brands, including Boohoo and Pretty Little Thing (both sites ship to New Zealand). Zara uses dynamic pricing too, according to Forbes, as does Levi’s, according to Business of Fashion, which also notes that supply chain platform Blue Yonder incorporates at least 20 different weather metrics in its price-elasticity modelling. 

Rapidly improving digital technology has made dynamic pricing available to even small retailers. The widely used e-commerce platform Shopify already lets merchants integrate AI-powered dynamic pricing into their stores; surge pricing, competitor price matching and “personal checkout offers” are all listed as features. Over on Amazon, sellers can deploy an AI tool called Profasee which allows for automated re-pricing. The company’s tagline touts “AI employees” who can “run your Amazon business while you sleep”. 

Dynamic pricing and the use of algorithms is legal in New Zealand, although it’s regulated by the Fair Trading Act. “The FTA does not prohibit changing prices, including prices set by algorithms. However, it does prohibit misleading, deceptive, or unfair conduct in how prices are displayed, compared, or explained to consumers,” explains Ben Christie, senior communications adviser for Consumer NZ. “You can change prices, but you cannot mislead people about what the price is, why it changed, or whether it’s a bargain.” 

Christie says that clothes shoppers in Australia are already seeing items in their cart moving up and down in price, which is a “clear indication of what New Zealand consumers are likely to encounter online”. He thinks we can expect more frequent, data‑driven markdowns over the next few years as retailers try to clear slow‑moving stock, but doesn’t expect demand-driven price rises to become commonplace. Dynamic-pricing markdowns would probably be more commonly adopted by discount, outlet and online-only retailers. 

The Commerce Commission, New Zealand’s consumer watchdog, is keeping tabs on developments in digital markets, including pricing practices that affect local consumers, says Simon Pope, head of fair trading and product safety investigations. The commission is “very much aware” of the increased use of dynamic pricing by businesses offering goods and services here, he says. “We also monitor sales tactics that are becoming more common. For example, scarcity claims like countdown timers and stock indicators that push someone into making a purchase.”

As more brick-and-mortar stores adopt digital labelling, there are concerns that pricing variation at retailers – including supermarkets – will become more common. Some marketing experts predict dynamic pricing will evolve further still thanks to AI, towards personalised pricing, which relies on consumer data to set individualised prices – someone who often fills then abandons online shopping carts might get a discount, for example, while someone who rarely shops might see a premium price. Or a retailer may use data like age, location and browsing history to tailor prices to an individual customer (also called surveillance pricing).

Overseas, a number of regions are taking action. The Australian Competition and Consumer Commission (ACCC) Digital Platform Services Inquiry, conducted from 2020 to 2025, found that AI presented “new and amplified risks” for shoppers. By using AI and consumer data to inform pricing and advertising, the report found, businesses could target “consumers’ vulnerabilities”. 

Meanwhile the European Union has been working on a Digital Fairness Act to strengthen consumer protections, with dynamic pricing among the myriad online issues in its crosshairs (its attention was drawn to the issue when demand-led ticket pricing for the 2024 Oasis tour drew the ire of fans). And in the US, New York and Maryland have both progressed state-level legislation targeting the practice. 

Could the New Zealand government follow these global examples? Damien Mather, a senior lecturer at the University of Otago who specialises in marketing and analytics, is sceptical. “Not immediately. I don’t think the current government has any appetite.” Down the road, he could see New Zealand “laggardly” adopting new regulations around pricing. “Because that’s what usually happens.”

So, are we facing a grim shopping future of ruthless, automated price gouging? “I don’t think so,” says Mather. “I think there are at least some businesses that will be smarter than that.”

Christie says sudden price hikes would risk reputational damage for a clothing brand, especially in a cost‑of‑living-constrained environment. Mather agrees, saying dynamic pricing chafes against New Zealanders’ shared values, where “fairness is fairly high on the agenda”. 

Those that do want to go down that road will need to know how their customers will react. “A large, responsible organisation should have done research with its consumers in the first place to see, will they tolerate this?” Mather explains. “You don’t want to kill off your customer base.” Any noticeable change should be understandable and justified if there’s any hope of consumer acceptance, otherwise there’s a risk customers may decide a business is hiding something – a response that would put any company in a risky position.

While Mather thinks dynamic pricing could be applied legitimately, it would need to have an authentic and transparent story behind it. “Customers can understand why businesses have to make a profit, but they don’t want to feel like things are unfair.”

Have you experienced dynamic pricing? Tell us about it in the comment section.