In an unusual turn of events, retailers in one market at least actually made money on turkeys this Thanksgiving.
For the first time they can remember, retailers operating in the Minneapolis/St. Paul market area, told SN that turkeys this year shed their loss-leader status.
"We made money on them for the first time in many years," said Tom Scheirer, director of meats at Rainbow Foods, a 33-store chain based in Hopkins, Minn. "It was wonderful."
George Baker, director of meat operations at Nash Finch Co., Minneapolis, a wholesale grocer that operates 92 stores and 16 distribution centers, said, "We did not see the lowball pricing this year. There seemed to be less giveaway in the metro area of Minneapolis this year than there had been in the past."
He said there were some coupon offers and some promotions for free turkeys with a minimum purchase. "But the twin city area seemed to say enough is enough."
Baker, of course, is referring to the competitive pressure that has forced retailers to consistently sell turkeys at or below wholesale prices, costing retailers thousands of dollars in the hopes of keeping holiday traffic in their stores.
In November Rainbow priced its frozen turkeys at 78 cents a pound, said Scheirer. The wholesale prices ranged from a low of 59 cents in April to 76 cents close to Thanksgiving. He said he ordered his ahead of time and got a good price.
Gerald Swanda, meat and deli director at Holiday Cos., Minneapolis, which operates 27 supermarkets and 238 convenience stores, said, "It was the first time we sold turkeys over and above cost. Everyone in the Minneapolis market did."
Holiday also priced its frozen turkeys at 78 cents a pound, said
Swanda. "In dollars we sold as many as usual, but we sold fewer turkeys."
While Holiday sold fewer turkeys but at a better margin, according to Swanda, Rainbow completely sold out on its supply and had to order more to restock for Christmas. "Volume was good. We cleaned up on turkeys," said Scheirer.
In recent years Rainbow's retail turkey prices have varied from 39 cents to a high of 69 cents. "We've lost a lot of money in the past on turkeys," said Scheirer.
Last week Nash Finch was still sorting out its turkey sales data for the holiday. But based on initial reports, Baker contends that volume sales of whole bird turkeys were down.
However, he added, "I think that profits, in most cases, have been the best we've had in retail in recent years."
Baker noted that a handful of retailers sold birds for as low as 59 cents, but many other operators in the marketplace priced them as high as 89 cents. Nash Finch prices averaged 69 cents for its frozen turkeys.
How did the phenomenon happen?
Scheirer said Rainbow can take some credit for the shift. He said Rainbow tries to wait until other operators have announced their prices, and then advertises that Rainbow won't be undersold.
"We started this about six years ago. And it seemed to kind of calm the market down in this area. It keeps people from undercutting each other," said Scheirer.
"They say, 'Why should we lose all this money? Competition is going to match us anyway.' "
In Baker's opinion, no one operator really tried to dictate what should happen in the market. He maintains that the collective thinking was this: "If nobody takes an aggressive approach, we are not [going to] either. That's what it looks like happened."