Why Costco, Trader Joe’s has stopped selling your favorites

New York
CNN business

You may have been there: Heading to Trader Joe’s for caramel popcorn, churro bites, and roasted gorgonzola crackers, or to Costco for its Kirkland Signature peanut butter cups and grab-and-go pizza.

But when you get to the store, your favorite candies aren’t on the shelf. And, to your horror, you learn that they won’t be coming back.

They have stopped.

It is one of the most frustrating experiences as a grocery shopper. Why a beloved product is out of stock is one of the most common questions customers ask in stores. Fans have social media accounts to track discontinued products at Trader Joe’s and others blog about long-lost items at Costco.

“We understand it can be frustrating — even devastating,” Trader Joe’s says on its “product comments” contact page for customers.

There are several reasons why Trader Joe’s, Costco ( COST ) and other stores stop selling customer favorites.

Sometimes products will be seasonal, or a manufacturer always planned to make them for a limited time. Also, at stores like Costco and Trader Joe’s, product cancellations can reinforce the treasure hunt appeal of these stores.

But more often, there are other strategies at play.

One major factor: It’s hard to get shelf space inside Trader Joe’s and Costco and stay there. These companies sell a limited number of items, only products that are in the highest demand from customers.

The strategy is quite different for supermarkets, even the likes of Walmart ( WMT ) and Amazon ( AMZN ), which offer a wide variety of foods and brands. Costco, for example, sells about 4,000 different products at any given time. Traditional supermarkets typically sell 40,000.

The ability of both companies to keep prices below most of their competitors lies in the fact that they turn over large volumes of merchandise sold every minute, every day.

If an item isn’t selling fast enough on the shelf at Trader Joe’s or gathering dust in Costco’s warehouses, companies have to switch to something else that customers will buy.

“Because if you don’t have high volume or growing volume, the cost of producing and handling a slow-selling product doesn’t make business sense,” Trader Joe’s vice president of marketing Matt Sloan said in a company podcast. this year

Other times, it’s the product itself: companies will pull items if suppliers raise the price too much or the quality drops.

“Costco would rather not sell an item than sell it at a price that’s too high,” said Chuck Howard, assistant professor of marketing at Texas A&M’s Mays School of Business. “It would be off-brand to sell things that consumers would think would be too expensive.”

For example, about five years ago, Costco replaced Perdue’s 27-pound, 10-pound chicken with a $21.99 Wayne Farms version, said Marcus Walker, Costco’s assistant frozen food buyer from 2005 to 2020.

Items that are cheaper in other stores are also essential to get rid of.

Costco wants its products to be the lowest priced option. He pulled Hot Pockets because he couldn’t match Sam’s Club prices on produce, Walker said.

Costco’s teams buy their suppliers’ products from competitor stores and test them to compare the quality with Costco’s. If they find an item tastes better elsewhere, they’ll ask the supplier to make it better for Costco, Walker said, and if that doesn’t happen, Costco will look to replace it.

Another issue, which the pandemic emphasized, is the stability of product supply. If a manufacturer can’t produce enough of a product, companies will stop selling it and replace it with something they can keep on the shelves indefinitely.

In 2020 and 2021, due to overwhelming demand from customers stocking groceries during the pandemic, manufacturers halted production of many secondary products to make only their most in-demand items. And while demand has eased this year and factories have returned to operating at a more normal capacity, manufacturers still aren’t making as many items as before the pandemic.

Hormel Foods ( HRL ), the maker of Skippy and Spam, and Mondelez ( MDLZ ), the owner of brands like Oreo, are among the companies that have recently said they are reducing the number of products they’re selling to focus on their top line. – the actors

Angela Ackerman, who runs the @Costcoguide Instagram account with more than 230,000 followers, said Costco fans often ask her why they haven’t found Costco’s dark chocolate dried mangoes in particular.

“They fall in love with something and want to see it again,” he said.

Scarcity can fuel sales, as Ackerman knows. When he sees a notice at Costco saying they won’t sell a prized product, he buys more before it runs out. “I know it will go away, I supply it.”