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Costco's rotisserie chicken is still sold for $4.99, despite rising costs. Tim Boyle/Getty Images hide caption
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Costco's rotisserie chicken is still sold for $4.99, despite rising costs.
Tim Boyle/Getty ImagesInflation is raising the price of all sorts of items in the grocery store, but one staple appears to be immune: rotisserie chicken.
That's not to say the poultry industry isn't suffering from soaring costs. Chicken prices nationwide have increased 16.4% in the year to April, according to the Consumer Price Index. And pointing to the ongoing bird flu outbreak, the U.S. Department of Agriculture predicts wholesale poultry prices will increase 15-18% this year.
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But stores including Costco, BJ's and Sam's Club are keeping their rotisserie chicken prices low — $5 or less. Other chains, like Publix and Giant Eagle, remain in the $7 range.
Ernest Baskin, an associate professor of food marketing at Saint Joseph's University, tells Morning Edition that it's an example of loss leader pricing, a marketing strategy in which companies sell certain products below their market cost in order to get shoppers in the door — and, oftentimes, other higher-priced goods into their baskets.
Rotisserie chicken is a loss leader: visible and affordable"It is a way of the store giving you a discount on a very highly prominent item and then making up the money on some of the other items in the store," he explains.
The prices of most goods are going up at every grocery store, Baskin adds, so retailers are trying to differentiate themselves by running discounts on items that are especially attractive to customers. In the case of stores such as BJ's and Costco, that's the beloved $4.99 rotisserie chicken.
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During an earnings call last month, BJ's CEO Bob Eddy said the store has kept the low price "just because it's such a meaningful thing to our members." He said the chain makes similar investments in other "key member value items" like paper and water.
Rotisserie chickens in particular are a marketable combination of visible and affordable, Baskin notes.
"It's also in the store an aura of saying, 'Look, our prices are generally very low. We don't raise them unless we absolutely have to,' " he says. "They're giving a cheapness aura to the store, which is helpful for consumers when they're concerned about their spending power."
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Even if shoppers are filling their carts with other goods that have gone up in price, he adds, they're likely feeling somewhat better because they've saved money on at least one highly visible item.
Grocery stores put the best-value stuff in the back for a reasonAnd once shoppers are inside, they'll typically have to traverse multiple aisles to get to the chicken — passing lots of other products along the way. That's no coincidence.
"The store really wants you to walk through the store, see what other items the store has, and ideally either consider putting them in your basket or actually take the step of putting them in your basket," Baskin says.
