Costco retails its chicken and eggs for cheaper rates despite the outbreak of the avian flu.
Since a relatively long span of time, Costco Wholesale Corporation, the wholesale retailer, has been in the limelight for its prices for chicken. The company has been selling poultry at a relatively cheaper rate, which has made it a ‘talk of the town’. Most of the consumers are aware of the fact that bird flu has caused massive disruption in the poultry sector, making it now an extremely overpriced entity. Most of the retailers are selling poultry at a high price due to the shortage. However, Costco Wholesale has a different approach over this matter; despite there has been a rise in chicken prices due to the shortage that is associated to the bird flu outbreak, Costco has decided to price its famous chicken for $4.99 only. “When others were raising their chicken prices from $4.99 to $5.99, we were willing to eat, if you will, $30 to $40 million a year in gross margin by keeping it at $4.99”, reported Mr. Richard Galanti, the chief financial officer of Costco, during a recent earnings call by the company. According to him, that is how the company is striving to survive. The shortage of poultry has resulted in making the wholesale retailer to spend more than the designated amount on eggs. The company, at this point of time, is more interested in eggs than chicken. According to the senior vice president of fresh food, Mr. Jeff Lyons told Huffington Post, “It’s all about shelled eggs.” Costco has now reported a major increase in the egg prices due to the shortage that they are facing. When eggs become expensive, there are several factors that consumers need to understand. Firstly, after this, the cost of bakery items and other items that require eggs will actually rise but even then, the company does not really have any plan to increase the price of their pastries, cakes, and other confectionaries. The retail giant states that it is not their strategy to increase prices when the price of raw products ‘accelerates’. They now consider it as a challenge, which they wish to emerge out from successfully. According to reports, the recent avian flu is one of the worst outbreaks in the history of United States, where poultry population has been brutally effected. In such a scenario, where all other retailers are increasing prices, the dignity of Costco needs to be appreciated, since they have not started to cash the situation for their own advantage. This is a great step, which deserves appreciation, | |