With inflation driving the price of food consumed at home up double-digits over the past year, Americans can expect a traditional Thanksgiving dinner to cost between 13.5% to 17.8% more than it did last year, according to IRI and Datasembly, respectively.
Most of this increase will from pies and sides, the prices for which IRI notes are up 20.3% and 18.8% from a year ago. Within sides, the basket item with the largest increase – for the second year in a row – is the Russet potato, which is ringing in this year at an average of 90 cents compared to 57 cents last year, according to Datasembly. Other baking ingredients are up 11.1% and beverages are up 5.8%, IRI adds.
Prices for turkey – both frozen and fresh – also are up double digits with Datasembly pegging the respective increases at 11% and 19% from mid-October to mid-November.
Higher prices will hit consumers differently depending on their socio-economic status with younger consumers more likely to worry about their ability to afford their usual holiday celebrations than older consumers. According to IRI, 23% of Millennials and Gen X consumers compared to 10% of older consumers were unsure if they could afford their usual fare.
IRI also found that 38% of consumers expect to pay more for groceries this year, but plan to purchase the same amount – swallowing the difference or looking to mitigate it by shopping early and hunting for deals.
Deal-hunting and swapping more budget-friendly holiday meal options is a popular strategy that 69% of the 2,100 Americans surveyed by Crestline said they are adopting this year.
Among the cost-saving swaps under consideration by 45% of Crestline respondents is a move to a vegan alternative to Turkey – creating an opportunity for the beleaguered plant-based protein segment, which has seen sales growth slow dramatically in recent months, to drive additional trial or entice back to their category shoppers who maybe entered the space during the pandemic but left once supplies and prices of animal protein stabilized.
Retailers play the long-game with heavy short-term promotions
Given how much is on the line – both in terms of dollar sales and the potential to earn longer-term market share and consumer loyalty given the likelihood of channel and banner shifting – many retailers are offering steep discounts on key items to get shoppers in the door.
Among them is Walmart, which is gaining share among wealthier consumers who have not traditionally shopped the retailer but who are looking for lower grocery prices as year-over-year inflation for food at home topped 12% in October.
“As you would expect, we’re helping families stretch their dollars as we head into the holidays,” Walmart CEO Doug McMillion told investors earlier this week during the company’s third-quarter earnings call.
“The Walmart US team has set the retail prices for a typical Thanksgiving meal the same as last year – we’re removing inflation on a basket of traditional Thanksgiving food items, including whole turkeys for under $1 per pound,” he said.
He added shoppers’ dollars are “going further at Sam’s Club too, with racks of lamb and lobster tails priced more than 40% lower than last year.”
In its calculations, Walmart looked at pricing traditional Thanksgiving baskets in multiple ways to appeal to its increasingly economically bifurcated consumers. One basket of 25 items is estimated at $88 – the same as last year – and it focuses on scratch cooking. Another basket filled with more conventional, non-scratch items comes in at $71 and includes 17 items, including branded items that will appeal to more affluent shoppers.
Aldi is taking a similar approach as Walmart – rolling back the prices of select Thanksgiving staples to pre-pandemic (and pre-inflation) ranges, representing discounts of about 30%.
Aldi is hoping the price drop on individual Thanksgiving favorites will translate to larger baskets and higher dollar sales overall as it leverages the sales to encourage shoppers to try an additional side dish or invite for friends and family to their table this year. It also hopes to show shoppers that it has their back not just at Thanksgiving but all year.