An empirical study of advertised retail meat prices in a metropolitan area
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The major portion of all food items is ultimately sold through retail outlets, most of which are large supermarkets. Since market conduct in food retailing notably affects social welfare, it warrants empirical examination. Retail food pricing and advertising behavior is of perennial interest to consumers and economists. Several studies in the past have examined various aspects of advertising and pricing behavior of food retailers. This study differs from most of the previous studies in giving a very intensive coverage of the meat counter. The study included virtually all beef, pork, poultry and lunch meat items. It was, however, concentrated solely on advertised meat prices of all major retail chains and affiliates in the St. Louis metropolitan area. Weekly data for the advertised meat prices from different firms were obtained for a total of thirteen (1960-72) years by consulting the appropriate newspaper files in the Missouri Historical Society Library. The primary objectives of this study were to determine the nature of merchandising behavior in the retail meat business and to examine the various aspects of advertising and pricing patterns developed by stores over time, insofar as these are revealed by their newspaper advertising. Regression analysis and nonparametric tests were used as analytical techniques to test various hypothesis. Findings of this study indicated that, none of the stores had a fixed specie advertising pattern through 1960-72. In other words they have been changing their proportional advertising emphasis put on various species of meat from one sample period to another. Furthermore, neither these changes had any systematic pattern over time nor did they have any systematic response to the changes in proportional share of different species in per capita supply of meat. It was found that each store had a tendency to follow the advertising pattern practiced by it during the immediate past, whereas over the long run they tend to reshuffle the mix of items going into their ads. Furthermore, it was observed that national chains have been advertising a significantly greater number of items than affiliates. Similarly they seem to advertise those items more frequently than affiliates. On the other hand, local chains have been advertising the largest array of items, and almost as frequently as national chains. Most of national chains, affiliates and regional chains have been putting significantly greater advertising emphasis on high price elastic cuts of pork. On the other hand, local chains have been putting significantly more advertising emphasis on less price elastic cuts of pork. The among-store price variances were not homogeneous over time for any of the twenty items included in the analysis. Therefore, due to this heterogeneity of variance over time, it was not possible to make any forecast about the range of prices within which different items would be advertised by retailers in the future. Similarly, it was found that there were more variations among the store prices of high price items than among low price ones. It was found that the advertised prices of whole and cut-up fryers relative to their wholesale prices have not changed significantly over time. However, the advertised prices of beef and pork items in the sample relative to their respective wholesale prices have shown a significant increase over time. Finally, it was observed that, in a St. Louis metropolitan area, there has been a significant increase in the consumers' preference (as interpreted by retailers through their advertised prices) for first cut pork chops relative to pork steak, shank portion and butt portion hams.
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This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License.