Costco CEO says $1.50 hot dogs and $4.99 rotisserie chickens aren’t going away — the in-store experience is still a priority as other retailers pivot to e-commerce

Customers queue to enter a Costco Wholesalers in Chingford, Britain Reuters
  • Costco’s CEO said that the retail giant’s brick-and-mortar stores are here to stay.
  • “It’s still important to get people physically in the store. I don’t think brick and mortar is going away,” said Craig Jelinek on CNBC’s “Closing Bell” Monday.
  • Meanwhile, competitors like Walmart and Target have expanded curbside pick-up options since the outset of the pandemic, and food-delivery services have turned to “ghost kitchens” in a pivot away from brick-and-mortar.
  • Visit Business Insider’s homepage for more stories.

As retailers across the country pivot to e-commerce, Costco’s CEO says the in-store experience is here to stay.

“It’s still important to get people physically in the store. I don’t think brick and mortar is going away,” the CEO said on CNBC’s “Closing Bell” Monday.

The comments come at a time when retailers across the country are turning to e-commerce and curbside pickup to court COVID-conscious customers. Walmart and Target both expanded their curbside pickup options since March, and restuarants have turned to “ghost kitchens,” which exclusively produce food for delivery, amid health concerns.

Meanwhile, Costco saw e-commerce sales increase from 5% last year to 9% this year, but still remains “stubborn on digital,”Business Insider previously reported. Its pickup options are limited to expensive goods like jewellery, with few plans to expand in the coming months. And in-store traffic has actually grown, with traffic up 6% in October.

Traditionally, Costco has focused on pulling customers into stores with offers like $US4.99 rotisserie chickens and its $US1.50 hot dog and drink combo, which has cost the same since 1985. Free food samples, which the store temporarily suspended due to the pandemic but now is bringing back on a “slow rollout basis,” are also a customer favourite and a key part of the in-store experience.

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Early in the pandemic, Costco executives worried that people would be reticent to visit the store in person, and they would discontinue their Costco membership, Jelinek said on Monday.

“You pay to shop at Costco. Are you going to be able to continue to renew at the same rates?” Jelinek said.

But despite initial concerns about customers staying home, Jelinek said that customers were as loyal as ever, with a renewal rate of about 91%, he said.

“There’s no better way to do it than a $US1.50 hot dog and a rotisserie chicken,” he added.

Watch the complete interview on CNBC.