Saturday, March 8, 2014

Random Costco News of the Week: Costco's Profit Strategy: Roast Chicken and Organics

I've blogged about Costco's $4.99, loss-leader roast chicken before, it's in the news again as Costco's profits dipped the last quarter and analysts are calling the strategy into question.  

On the earnings call, Richard Galanti, CFO, said that Costco plans to stick with the strategy for now, but also mentioned the increase in organic products (I've blogged about this), which have a higher margin of profit and which are pulling in more young people.  To judge from my family, I'm going to have to agree, it's the organic products that convinced my daughter-in-law to shop there, not the roast chicken.

I love the roast chicken, and always keep one on hand, but I honestly wouldn't mind a price increase. Costco, if you up the price $.50 cents, I would still buy it.  People realize that everything goes up in price, some of us can remember when McDonald's hamburgers were $.15 cents.  Costco, I want you to thrive and continue to give me good deals; $.50 cents is not going to ruin our relationship.

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