Store-Level Retail Fruit Demand: Lessons from Omitted Variables

This study examines how marketing strategies of produce managers affect consumer expenditures for fresh fruit. A non-linear Almost Ideal Demand System was used to model the share equations for Gala apples, Fuji apples, Red Delicious apples, other sweet apples, tart apples, pears, bananas, and oranges. Seventy-nine weeks of data on weekly store sales were collected from two grocery stores in the Portland, Oregon metropolitan area. The objective of this paper is to discuss those variables that were examined but found to be insignificant in the demand model. Those variables include displays, traffic flow, in-store specials, Food Alliance labeling and signage, lagged prices and advertisements, damage-quality measure, incorrect use of inserts and advertisements, nutritional/health information, and the availability of a smaller product. Reasons for the exclusion of these variables and the lessons learned are discussed.