> During an earnings call last month, BJ's CEO Bob Eddy said the store has kept the low price "just because it's such a meaningful thing to our members." He said the chain makes similar investments in other "key member value items" like paper and water.
Although the article doesn't use the word, this is a subsidy. It's not unlike the subsides that governments give to keep certain prices such as fuel and food low. It's also similar to the currency peg that certain governments set for their own currencies relative to another.
It strikes me that the stores are kind of running a peg on two commodities whose supply they have no control over: chickens and dollars.
If you can't control the supply both sides of the peg, it will eventually fall. Depending on how important that peg is to your image, you might be able to absorb considerable pain along the way.
Although the article doesn't use the word, this is a subsidy. It's not unlike the subsides that governments give to keep certain prices such as fuel and food low. It's also similar to the currency peg that certain governments set for their own currencies relative to another.
It strikes me that the stores are kind of running a peg on two commodities whose supply they have no control over: chickens and dollars.
If you can't control the supply both sides of the peg, it will eventually fall. Depending on how important that peg is to your image, you might be able to absorb considerable pain along the way.