Dive Brief:
- Putting Thanksgiving dinner on the table will cost less than it did last year. According to the American Farm Bureau Federation’s annual survey, fixing a Thanksgiving meal for 10 people will cost $49.12, down 75 cents, from $49.87 a year ago. It’s the second straight year prices have fallen and the lowest cost for the meal in five years.
- The biggest driving factor is low turkey prices. The average price of a 16-pound frozen bird is $22.38, or roughly $1.40 a pound, down about 1.6% from last year. "Wholesale turkey prices are now below $1 [per pound] for the first time since 2013," John Newton, the federation's market intelligence director, told CNBC. "We have an abundant supply of turkeys, and that's really leading to some of the lower prices that consumers are seeing at the grocery store." Deflation is hitting other typical holiday fare items, too, including sweet potatoes, rolls, green peas and even pie shells, the cable business channel reported.
- Grocers are taking advantage of price deflation and holiday promotions to incite additional price wars in an effort to drive traffic into stores with the hope of selling shoppers more higher-margin items.
Dive Insight:
Thanksgiving inevitably means grocers are slashing prices on holiday foods to try and make the most of turkey-day traffic. The periods around Thanksgiving, Christmas and New Year’s are among the biggest traffic and sales days for supermarkets, reports the Omaha World-Herald.
“There’s so much at stake for them,” Bill Bishop, chief architect at consulting firm Brick Meets Click, told the Omaha paper. “It’s important to win. Many people tend to spend much more on extras at the holidays, it's a win for supermarkets that lure them in the door with low turkey prices.”
The price wars are indeed in full swing, with many grocers using low-priced birds as a loss leader with the hope that consumers will buy a whole lot more while in the store. Amazon made the first widely publicized move this week, announcing another round of price cuts at Whole Foods that's centered on holiday staples, plus more than a dozen grocery products.
Fresh organic turkeys will be sold for $3.49 per pound at Whole Foods, while antibiotic-free turkeys run $2.49 per pound. Prime members will get further discounts, bringing prices down to $2.99 per pound (14% off) and $1.99 per pound (20% off) for organic and antibiotic-free turkey, respectively. Organic sweet potatoes, 365 brand canned pumpkin and organic russet potatoes also are getting discounts.
These cuts could make a strong impression as consumers begin to hunt for the most competitive prices on turkeys, pies and other Thanksgiving classics. But it’s not just Whole Foods. Grocers nationwide tend to drop prices on key holiday food items this time of year, and some are even giving items away.
According to the Omaha World-Herald, local-area Family Fare and Baker’s stores are advertising turkey at 57 cents a pound. “Free” turkey promotions are being run by Fareway — get a free turkey with a $50 purchase — and Hy-Vee, which is featuring its annual “buy a ham, get a free turkey” deal.
Kroger Plus Card members can snag a frozen store brand turkey for 49 cents a pound with an additional $20 purchase, and Walmart has a deal on Butterball turkeys at 98 cents per pound.
These kinds of prices make consumers the biggest winners, leaving change in their pockets to gear up for Black Friday deals and other holiday spending. Grocery retailers, on the other hand, could risk yet another hit to their top- and bottom-lines given this extraordinarily low seasonal pricing.