Costco Members Are Steering Clear of This Product. Here’s Why

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Costco shoppers seem to be pulling away from one product. Read on to see what it is, and what this might indicate about the economy. 

The upside of shopping at Costco is getting to save money on a host of products, from groceries to household essentials. In fact, for people who shop at Costco frequently, the cost of an annual membership can easily end up paying for itself.

But on Costco’s most recent earnings call, CFO Richard Galanti confirmed that members have been purchasing less beef and instead buying more poultry and pork, which are typically cheaper meats to purchase. And there’s a big reason for that.

Consumers are feeling the strain

Inflation has been battering consumers for a good two years now. And so it’s not shocking to see that Costco members are cutting back on expensive meat like beef and replacing it with lower-cost alternatives.

Many consumers have seen their credit card balances soar since inflation began to surge. Buying fewer expensive products is a good way to stop the bleeding and potentially avoid adding to those balances.

Consumers may be eager to conserve cash

Many financial experts spent much of 2022 warning about a 2023 recession. At this point, it’s questionable as to whether we’ll see economic conditions take a notable turn for the worse before the year comes to an end. After all, we’re already in June, and things are generally pretty positive. The jobless rate in May was just 3.7%, and 339,000 new jobs were added to the economy last month.

But still, those recession warnings keep coming. Even the Federal Reserve itself said a few months ago that consumers should anticipate a 2023 recession, albeit a mild one.

Another reason consumers may be shifting away from expensive meats and replacing them with cheaper ones is to conserve cash ahead of a potential economic downturn. In fact, Galanti said that some consumers are even switching to canned products, like chicken and tuna, because that’s an even less expensive option for adding protein to a diet.

Should you cut back on beef purchases?

If you enjoy eating beef and can afford to keep buying it, then by all means, don’t stop — especially if you’re able to find it at a relatively affordable price point at Costco. But if money has gotten tight in your world, or you’re worried about a recession, then you may want to consider substituting beef with less expensive proteins for the time being.

Of course, that’s only one of several changes you can potentially make. Take a look at your total spending and see if there are other expenses you can cut back on. You may decide to cancel a streaming service or subscription and use your savings to pay off an existing credit card balance or give your emergency fund a boost in case economic conditions really do worsen at some point this year.

It also pays to be judicious with your Costco shopping outside of meat purchases. Although Costco is known for its low prices, there may be certain items you can find for less at discount grocers or dollar stores. Do your research to stretch your limited funds at a time when groceries are still very expensive across the board.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Gala. The Motley Fool has a disclosure policy.

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