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You may call yourself an extreme Costco shopper, but have you ever listened in on one of their quarterly earnings calls for shareholders? Well, I did one night in March 2023, and it wasn’t as boring as you may think. In fact, I found out a few helpful nuggets of information — there were even some jokes! — and I’m here to share what I learned.
In a nutshell, the Costco execs gave me some hope that inflation may be easing, at least in a few areas of the grocery aisle. And whether you’re a Costco fanatic or not, what Costco has to say about food prices carries a lot of weight. They have one of the lowest markups in the industry, and they’re all about lowering the cost per unit to get shoppers in the door.
So what price drops should we watch for this year? Let’s get into it.
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Costco still has one of the lowest markups in the industry.
We’ve known this for a while, but Costco’s CFO confirmed it on the March earnings call: they don’t mark up name-brand items nearly as much as other stores do. When you shop at Costco as a member, you’ll only pay about 14% – 15% over what the product actually costs. Compare this to traditional retailers, where the markup can be 25% to even 100%.
Basically, Costco will continue to keep their prices low because it’s a key part of their business model.
Related: One thing that may go up later this year? Membership fees at Costco.
Their $4.99 rotisserie chickens are here to stay.
Costco execs call their $4.99 rotisserie chicken a “wow” item. The shockingly low price of Costco’s 3-pound chicken is a great example of a loss leader, a clever tactic stores use to get people in the door by advertising a super-low price.
So don’t worry about the price for this fan-favorite going up anytime soon. Their leadership confirmed that the rotisserie chicken is “an investment in low prices to drive membership” (and sales) in a big way.
Here are the items Costco expects will get cheaper:
My money-saving ears perked up when Costco execs mentioned specific items getting cheaper, like their 25-pound bags of jasmine rice. According to the earnings call, they’re seeing commodity prices fall for a few different food items. Not back to pre-COVID levels, but getting closer.
Here’s what they called out:
1. Bulk bags of rice.
You know those 25- to 50-pound bulk bags of rice at Costco? It costs a LOT to ship those heavy bags to stores because the shipping charge is calculated per pound.
According to Costco execs, shipping costs are coming down “dramatically” now that we’re past some of the supply chain bottlenecks that happened in recent years. Now that shipping prices are coming down, they’re noticing an uptick in sales of their bulk bags of jasmine rice, for example, which are getting cheaper as a result.
To give you an idea of how much prices have come down, we saw this 25-pound bag of Kirkland jasmine rice selling for $19.99 in March 2023. That was a 7% increase since March 2021, when it sold for $18.69. Now it’s headed back down again! As of July 2023, the in-store price is down to $17.49.
2. Chicken.
The Costco leadership team mentioned that commodity prices for chicken are falling, and I found stats that back that up. Prices for poultry reached an all-time high in September 2021, but from January to March 2023, they fell about 5.5%.
Back in March 2020, this 6.5-pound bag of Kirkland chicken sold for $16.89 at Costco. By March 2023, the price was sitting at $20.99 (a 24.3% jump!). And now in July 2023, my store had the same bag for $17.99:
Related: Even if beef prices aren’t getting any relief, at least we have a backup option.
3. Bacon.
Sliced bacon is having its moment, with average U.S. prices falling about 5.7% from January 2022 to March 2023.
What have the bacon prices looked like at Costco? Back in May 2021, this four-pound package of Kirkland bacon sold for $13.49, or $3.37 per pound. In March, it was up to $15.99, or $4 per pound — an 18.5% increase. But check out that low in-store price now:
4. Butter.
We’ve sure been following the roller coaster that is egg prices lately, but another favorite item in the dairy case may get some relief soon. Costco leadership mentioned that commodity prices are falling for butter, and I found the stats that confirm it’s dropped about 5% since the beginning of 2023.
Back in August 2020, we found a four-pack of Kirkland salted butter for $6.99 at Costco. Excuse me for the tears running down my face, but by March 2023 it was up to $14.29 — a 104.4% jump. This was one area where prices did indeed fall, as the current price as of July 2023 is $10.99 for the same pack:
5. Nuts.
Almonds, cashews, Brazil nuts, macadamia nuts. Those babies are NOT cheap. But Costco execs called out nuts as one area where commodity prices are improving (aka getting cheaper).
Costco had a 2.5-pound plastic container of Kirkland mixed nuts for $15.99 in February 2020, which is the same price they sold for in March 2023. It looks like they’ve updated the packaging to a resealable bag instead of a jar, and now the price for a 2.5-pound bag is just $13.99.
Related: We can help you save on groceries even without coupons.
You may want to join Costco now, before the membership price goes up.
It’s kind of a running joke on their earnings calls, but Costco has been hinting for a while that the membership price will be going up. You’re allowed to ask questions on their shareholder earning calls, and a bunch of people tried their hardest to get some specifics on when.
But no luck yet. They doubled down on their typical answer: “It’s not a question of if, but when” fees will rise. In the meantime, you can lock in the current prices for Costco membership with the deals happening now:
