Walmart and Costco compete on multiple retail battlefields.
The discount chain and the membership-based warehouse club are direct and indirect competitors.
Sam's Club, Walmart's (WMT) -) version of a paid membership club, offers basically the same experience as Costco does. Fans of both brands might dispute that assertion, but at root the two clubs offer no-frills, low-cost shopping along with perks like cheap gas, inexpensive food courts, and lots of other customer-friendly offers.
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Whether you join Costco (COST) -) or Sam's Club often comes down to geography. Some markets offer both chains, and while each brand has its diehard fans, most consumers join the club closest to their homes.
Costco and Walmart also compete for customers much more directly. Both offer low prices, and while some shoppers might prefer the larger selection at Walmart, many will simply go where they think they can get what they need at the best possible price.
Of course, both Costco and Walmart have found ways to lock in their customers. Walmart offers delivery and curbside pickup while Costco is largely an in-store shopping experience. The warehouse club, however, has some famous food offers that also bring customers to its stores.
The chain famously offers a hot-dog-and-soda combo for $1.50. It also has a rotisserie chicken that it sells for $4.99. That's a price point on which the chain loses money, but the deal drives customers to its stores.
Walmart charges closer to $7 for its rotisserie chickens (prices vary by market) but it will do something Costco won't: deliver a hot rotisserie chicken to you.
Image source: Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images
Walmart adds delivery of hot rotisserie chickens
Costco's rotisserie chicken has a cult following among members, at least as much for its price as its taste. But if you want one of the warehouse club's chickens, you have to go there to buy it.
Walmart offers a same-day delivery service for members who pay $98 a year on all orders over $35. Nonmembers can use the service, but each order will cost $7.95.
Now, the chain has made some changes and it's adding hot rotisserie chicken as a delivery option.
“We’ve optimized our operations to add more delivery slots and availability, which allows Walmart to deliver our hot rotisserie chicken the same day for its customers,” a Walmart spokesperson told Winsight Grocery Business.
That might seem like a minor convenience, but Walmart's rotisserie chicken is shockingly popular. The chain sells 103 rotisserie chickens every single minute, according to Restaurant Business Online. If you're counting, that's more than 148,000 a day, or more than a million a week.
Costco protects its price points
While Costco won't deliver its famous $4.99 chicken to its customers, it will protect that price point at all costs. Chief Financial Officer Richard Galanti talked about why the chain has decided to do that during its second-quarter-earnings call.
He considers the $4.99 price "an investment in low prices to drive membership -- to drive sales in a big way."
In many ways, the chicken and hot dog deals have become symbolic for Costco. It's a sign to members that the company's core promise to them is that it will fight to keep costs down.
Costco has also been very open about the impact of inflation on its prices. The chain has said that it has eaten some of the higher costs and not passed them on to its members. Things, however, have been improving, Galanti indicated during the chain's Q3 earnings call.
"Inflation continues to abate somewhat," he said. "If you go back a year ago to the fourth quarter of '22 last summer, we had estimated that year-over-year inflation at the time was up 8%. And by Q1 and Q2, it was down to 6% and 7% and then 5% and 6%. In this quarter, we're estimating [year-over-year] inflation in the 3% to 4% range."
He noted that prices have been coming down in many food items, including nuts, eggs and meat.
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