Egg Prices Soar, Grocers Scramble to Keep Shoppers
Record-High Egg Costs
Egg prices have hit an unprecedented high, with shoppers paying an average of $4.95 for a dozen large Grade A eggs at supermarkets. However, this is still $3 below the wholesale price that grocers incur.
Grocers Absorb Losses to Maintain Market Share
Grocery stores are reluctant to fully pass on these increased costs to consumers to maintain affordability and prevent shoppers from finding cheaper alternatives elsewhere. Instead, they are employing various strategies to mitigate the impact on their margins.
Loss Leader Strategy
Milk and eggs have long been known as "textbook" loss leaders, sold below wholesale costs to attract customers into stores. Their bulky and perishable nature encourages shoppers to make additional purchases while navigating the store.
Avian Flu Crisis Impacts Supply
An outbreak of avian flu has decimated egg-laying hen flocks, leading to a significant supply shortage. Nearly 158 million birds, including many laying hens, have been affected since February 2022.
Grocery Store Tactics
Retailers are implementing several tactics to offset egg losses:
* Reducing Promotions: Grocers are pulling back on discounts and promotions to avoid further margin erosion.
* Enticing Customer Loyalty: Loyalty programs offer deep discounts on eggs in exchange for spending milestones, encouraging increased purchases.
* Purchase Limits: Some chains like Trader Joe's and Costco are limiting egg purchases to prevent stockpiling and ensure availability for all customers.
Future Outlook
Egg prices are expected to continue rising due to ongoing avian flu infections and a supply gap. However, consumer demand remains strong, with a potential spike during the high-demand Easter season.