Abstract
Abstract Sales of fresh food products are a predominant feature in retail pricing around the world. Price-based sales offer significant price cuts in products for a limited time and are the most popular form of promotional sales in Europe. From a consumer perspective, it is of interest to determine whether such price-based sales are reflected in the price of typical market baskets, or whether they are financed by price increases for other products as suggested by the loss- leader hypothesis. Competitive market theories suggest that a sale signals a reduction in market basket price. Within this setting, this article empirically examines the implications of sales for the market basket prices. Results are drawn from analysis of a unique data set for fresh food items in German grocery stores over the period from 1995 to 2000. Results indicate that in the short-run the market basket price for fresh food decreases with the number of fresh food product sales, consistent with competitive pricing. However, over ti...
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