DALLAS — November turkeys have been the perennial loss
leaders of the grocery business, sold at or below cost since, it seems, just
after the first Thanksgiving.
This year, with consumers bracing for a second straight
holiday season of lost jobs and foreclosed homes, grocers are paring prices
beyond the norm. They’re also reducing, or removing, the strings attached to
getting the best deals.
And consumers, hungry for a bargain, are biting.
“Selling (turkeys) at below cost doesn’t surprise me
one bit,” said Rick Johnson, president of the Texas Grocery and
Convenience Association, a trade group. “But you probably will see more
discounting this year because of the economy. People are a lot more price-conscious
now.”
Retailers, afraid consumers would bypass this year’s food
fest, decided to do something eye-catching to loosen consumers’ tight fists.
With Halloween decorations barely put away and the battle
for holiday supremacy just under way, the nation’s largest grocer came out
swinging.
In early November, Wal-Mart Stores Inc. said it would sell
Grade A frozen turkeys nationwide for 40 cents a pound — less than half last
year’s price of 84 cents a pound.
It’s also less than half the October wholesale price of 82.7
cents a pound for frozen turkeys, according to the U.S. Department of
Agriculture. (Most consumers buy frozen turkeys, which account for 90 percent
of turkey sales at some chains.)
Unlike other grocers, Wal-Mart’s turkey discount did not
require a store loyalty card or a minimum purchase.
A Wal-Mart spokeswoman would not say whether the grocery
behemoth was getting clipped on each bird sold. But experts said retailers
selling turkeys for 30 cents or more below wholesale are almost certainly
taking a loss.
“At Thanksgiving, there is no relationship between
wholesale prices and retail prices because so many places sell turkeys at below
cost just to build traffic,” said David Harvey, a poultry and aquaculture
specialist with the U.S. Department of Agriculture. “There’s no way those
places could buy turkeys that cheap. They haven’t been that cheap for years and
years.”
Days after Wal-Mart’s announcement, Kroger lowered the bar.
Shoppers with its Plus card could pay 33 cents a pound on a name-brand frozen
turkey, Jennie-O, with a $20 purchase. Without the card, it costs $1.19 a
pound.
Wal-Mart matched the 33-cent offer in some areas.
With consumers clustered around a frigid display case
Saturday at a Kroger in Dallas, Ken Henk explained the unwritten quid pro quo
of cheap turkeys.
“It is a loss-leader program for the company,”
said Henk, meat merchandiser for the Kroger region that includes Texas.
“We sell it below cost. It does lower our profit margin, of course. We’re
counting on the loyal customer, that they will reward us by buying those other
items as well.”
Mary Linenschmidt of Dallas has shopped at Kroger for four
decades. On Saturday, she picked up a 13-pound Jennie-O for $4.29 — part of an
estimated $150 in items in her shopping cart.
She originally was looking for a Honeysuckle White turkey
but chose this one because “it’s a very good price (and) I’m here. I don’t
want to chase all over town.”
Paying less for the big bird gives consumers more money to
buy items with higher margins, especially treats from retailers’ bakeries.
“What we typically see is that the customer will have a
large basket,” Henk said. “They don’t just spend $20 to get the
turkey.”
Susan Baker of Dallas said a turkey at one grocery store
“was going to cost me 50 bucks. I didn’t buy it.”
Instead, she picked up a 21-pound frozen Jennie-O at Kroger
for less than $7.
“I’ve gotten to the point where I expect it to be free
or almost free,” Baker said. “Even though it’s cheap, I’m buying a
lot of other things.”
The price drops even seem to defy the laws of supply and
demand. U.S. third-quarter turkey production was down nearly 10 percent from a
year ago, as farmers sent fewer birds to market, according to the USDA’s Nov.
17 Livestock, Dairy & Poultry Outlook.
That might make cheap turkeys harder to find come New
Year’s.
They were harder to find for some Wal-Mart shoppers even
before Thanksgiving.
A spot check last week found four Dallas-area Wal-Marts out
of stock on the 40-cent turkey, although there were ample supplies of a 60-cent
alternative.
“Since we’ve announced the 40-cents-per-pound turkeys,
we’ve had an overwhelming response,” said spokeswoman Christi Gallagher.
“We’ve been replenishing the stores as they run out.”
The restocking wasn’t quick enough to benefit Richardson,
Texas, resident Brenda Acevedo. She didn’t know about the 40-cent offer and
arrived at a Garland, Texas, Wal-Mart on Sunday in time to get a 21-pound
Honeysuckle white turkey for 60 cents a pound.
Although “60 cents seems like a good price,” she
would have preferred 40 cents and regretted not making an early trip to get
that bird.
“It adds up,” she said, “so it makes a
difference.”
Back at Kroger, merchandiser Ken Henk kept a watchful eye on
the poultry in motion, as shoppers heaved frozen birds into shopping carts
stuffed with cakes, veggies and yams.
He was happy with the brisk sales, which were trending ahead
of last year, and also plotting his transition from seller to shopper.
“I plan to buy one,” said Henk, who’ll be cooking
for 30 relatives and friends celebrating the arrival of his son, who’s on leave
from Iraq. “It’s a very good value.”
Via McClatchy-Tribune News Service.
