A month before Halloween, Walmart was already promoting an inexpensive Thanksgiving dinner. The megachain announced discounts on holiday staples like green beans, cranberry sauce, and sweet potatoes. And it priced the crown jewel of the feast — a whole frozen turkey — at 88 cents per pound.
It wasn’t alone.
Aldi announced a $47 Thanksgiving dinner for 10 people.
Target offered a $20 meal deal for four and priced its store-brand frozen turkeys at 79 cents per pound.
These deals are undoubtedly good news for consumers still recovering from inflation. But grocers and retailers, which sold turkey at record-high prices two years ago and raised food and beverage prices by ~13% between 2021 to 2023, according to the Bureau of Labor Statistics, haven’t exactly caught the giving spirit of the holiday season.
Traditional economics suggest that you should charge more during periods of peak popularity. But every year retailers actually reduce turkey prices when demand is at its highest— and they still come out on top.
“The idea is these customers will stop in a Target, buy a turkey, and then also get a new couch or new TV or something,” says Chris Hydock, a Tulane University professor who studies retail pricing. “Or, in general, next time they go shopping they think, ‘Hey last time I shopped at Target it was cheap. And I should go back to Target in the future.’”
A loss feeder?
Most of the year, whole turkeys are relatively unpopular in the US — and relatively expensive.
Olivia Heller/The Hustle
While Americans devoured 101 pounds of chicken per capita last year and 58 pounds of beef, turkey consumption was only 15 pounds per person, according to the US Department of Agriculture (USDA).
But November remains the month of turkey. This Thanksgiving, Americans will consume ~40m-50m whole turkeys, or roughly 20%-25% of the 205m birds raised this year.
And, like clockwork, retail turkey prices are falling.
The per-pound weighted average retail price for a whole frozen turkey, less than 16 pounds, was$1.19 in the first week of November, down from weekly averages as high as $2.15 in September and October.
Similar shifts happen every year. Retail prices for turkey typically peak in September or October and then decline in November and December before climbing again in January.
Olivia Heller/The Hustle
Aviv Nevo, an economics professor at the University of Pennsylvania, has studied a similar phenomenon: the decline of tuna prices during Lent, when the fish is in high demand.
He says turkey prices could be sliding around Thanksgiving for a couple reasons:
A composition effect: During high-demand periods it’s possible more consumers choose less-expensive turkey than in low-demand periods, bringing the average price for turkey down even if stores keep prices about the same.
Price sensitivity: If consumers are paying more attention to turkey prices this time of year, retailers may realize they’ll fare better by charging lower prices and selling more.
But it’s unlikely these retailers will make much, if anything, off turkey. The USDA calculated the average per pound wholesale price for frozen turkey this fall at ~96 cents — higher than what Walmart and Target are charging.
That would suggest Thanksgiving turkey is a loss leader.
“The retailer might want to draw consumers into the store by charging a lower price for a product, potentially even below cost, to get them to buy other items and gain on those products,” Nevo said in an email interview.
Dinesh Gauri, a marketing professor at the University at Buffalo, says stores typically use high-frequency staples, such as bread, milk, eggs, and soda, as loss leaders. Consumers are likely to remember the prices of these items.
Do loss leaders work for retailers?
One of Gauri’s studies found that loss leaders are successful for retailers because they see higher traffic and higher margins overall. Just 2% of shoppers, he says, go into a store and purchase only the loss leader items — the rest fill up their grocery carts with other profit-making items.
Plus, big brands like Pepsi and Coke often pay for major stores to reduce the price of their products, eating the loss for the retailer.
Olivia Heller/The Hustle
Like any loss leader, cheap turkey gets people into the stores to spend money on other items, increasing traffic and margins. But in other ways it’s “a special case,” Gauri says. Target is discounting its own line of turkeys, so there’s no payment coming from a brand-name producer. Turkey is not a staple, and demand is higher than usual.
Most likely, Gauri says, the retailers see cheap turkey as a temporary loss that helps build longterm consumer habits. That’s because a customer who typically doesn’t go to Target or Walmart might see the discounted Thanksgiving meal, shop at the store and like what they see, and return more consistently in the future.
Similarly, the stores want to cement loyalty with their regulars and prevent them from switching to another retailer during the important holiday sales period.
That risk is real. Hydock, the Tulane professor, says the vast majority of shoppers split their budgets across two or more retailers for reasons like prices, quality of products, or convenience of transportation.
“Very few customers are consistently loyal with one retailer,” he says.
Facing this reality, Aldi, Target, and Walmart must follow each other when one does a Thanksgiving discount and hope their customers spend big on other items without asking too many questions about turkey prices the rest of the year.
Sometimes they do: “If you can do this now,” one Aldi fan asked on the store’s Facebook page, “why can’t you just leave the prices like this after Thanksgiving to help us have a little extra room in our pockets?
“But thanks anyway for offering this.”
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