A number of the UK’s biggest retailers are working on plans to install ‘surge pricing’ systems in their stores which allow prices on-shelf to rise and fall depending on demand.

A report by the Telegraph said that Tesco, Sainsbury’s and Morrisons are planning to replace paper price tags on shelves in some stores with electronic labels, which will let them change prices several times a day at the click of a button.

The technology, which is already commonplace in Europe and the US, lets shops react to events a during a day.  For example, they can remove offers on sought-after items such ice creams and chilled drinks during heatwaves and sandwiches at lunchtime.

Andrew Dark, Chief Executive at electronic pricing firm Displaydata, told the newspaper that demand for the such systems among UK retailers is starting to “go beserk”.

He said: “This kind of technology will be dominant in the UK within two years and within five years it will be rare to see a paper price tag. Paper tags often show the wrong prices as they have to be manually replaced by staff when prices move, but electronic labels can be updated in just 20 seconds.

“At present supermarkets are only able to act on around 20% of the price changes their computer systems recommend, but this is about to change.”

Meanwhile, Roy Horgon, director at Markethub, another e-pricing firm, said that shops can improve their profit margins by up to 3% by using the technology, mainly as a result of reducing the amount of waste created by stock left at the end of the day.

Spokespersons for Sainsbury’s, Tesco and Morrisons all told the newspaper that they were trialling electronic shelf edge labels and would be reviewing customer feedback before deciding on a wider roll-out.