While inflation is raising prices for all kinds of groceries, one staple seems to be immune to it: rotisserie chicken.
However, this doesn’t mean that the poultry industry isn’t facing rising costs. According to the Consumer Price Index, chicken prices have increased 16.4% over the past year. The U.S. Department of Agriculture predicts that wholesale poultry prices will rise between 15-18% due to the ongoing bird flu epidemic.
Costco, Sam’s Club and BJ’s are keeping their rotisserie chicken prices at aEUR $5 or less. Publix and Giant Eagle are still in the $7-$8 range.
Morning Edition was told by Ernest Baskin, Saint Joseph’s University associate professor of food market, that this is an example of loss-leader pricing. This is a strategy where companies sell products at a lower price than their market value to attract shoppers aEUR.” and often other higher-priced goods in their baskets.
He explains that the discount is given by the store to a prominent item, and then the money is used on other items.
Baskin says that prices are rising at most grocery stores. Therefore, retailers are looking to differentiate themselves by offering discounts on products that customers find particularly attractive. Costco and BJ’s have the popular $4.99 rotisserie chicken.
BJ’s CEO Bob Eddy stated that the store keeps the price low “just because it is so meaningful to our members.” He stated that the chain also invests in “key member value” items like water and paper.
Baskin says that rotisserie chickens are an attractive combination of affordable and visible.
It’s also in the store that there is an aura of saying, “Look, our prices are generally very high.” He says that we don’t increase them unless absolutely necessary. They give the store a low-cost aura, which is beneficial for consumers who are concerned about their spending power.
He says that even if they are buying more expensive goods, shoppers will likely feel a bit better knowing they have at least one item they can save on.
Once shoppers get inside, they will need to walk through multiple aisles in order to reach the chicken aEUR”, passing many other products. This is no accident.
Baskin states that the store wants customers to go through the store and see the other products available. Baskin suggests that you either put them in your basket, or consider walking around the store.
Costco sells rotisserie chickens in its back-of-the-stores for this reason. According to CNN Business, Costco is committed to keeping rotisserie chicken prices low. In fact, it opened a poultry farm in 2019 to provide its own birds for its stores. The Nebraska facility processes over 100 million chickens annually.
Costco is not known for selling chicken at a discounted price. Bob Nelson, Costco’s executive, spoke out during the earnings call last month to dispel rumors that the chain was raising the cost of a popular food-court item.
He said that the price at which we introduced the hotdog-soda combination in the mid-’80s was $1.50. The current price is $1.50 and we don’t plan to increase it.
Ben Abrams produced the audio and Ally Schweitzer edited it.
