I went down to my local Safeway to further investigate one of the big issues in turkeynomics – does the average retail sale price of turkeys fallin November because turkeys are discounted as loss-leaders, or because Thanksgiving consumers prefer cheaper lower-quality turkeys to those bought in other seasons.
To make things convenient for researchers this particular Safeway is pursuing an extremely explicit loss-leading strategy. The butterball turkey retails for $1.59 per pound – quite close to the October retail average – but they’ll give it to you for $0.99 if you buy at least $25 worth of other stuff. So loss-leader discounting is happening.
But that’s for Butterball turkeys. One thing the store has done this week (of course) is increase the quantity of shelf space that’s allocated to turkeys. And in that new space they have a big stack of generic store-brand turkeys. That’s not something I normally see. And those turkeys are priced much cheaper than the name-brand Butterballs. So insofar as consumers buy those turkeys, average retail sale prices will fall without discounting. The substitution effect is also happening.