16.6 C
Sunday, May 26, 2024
Home News Updates How Costco Has Kept Its 113 Million Members Hooked During The Pandemic

How Costco Has Kept Its 113 Million Members Hooked During The Pandemic

The latest product ensnared in the snarled global supply chain is cream cheese, apparently, causing a shortage that is wreaking havoc on bagel shops and bagel lovers everywhere, desperate to get their hands on the beloved schmear. As for Costco? Don’t fear, it has plenty of the stuff on its shelves.

“I checked … and it took a little extra work, but we’ve got all the cream cheese we need,” said Costco’s chief financial officer Richard Galanti on a call with analysts last week.

The big-box retailer’s ability to keep stuff in stock, and offer it at rock-bottom prices, is a big part of what has kept its 113 million members happy during the pandemic, fueling record sales and profits.

Costco benefits from its immense purchasing power, given the enormity of the orders it places with manufacturers to stock its 800-plus stores, which together move almost $200 billion in goods every year. Its strategy of focusing on a narrow assortment of products — it sells about 4,000 items, while other retailers may offer tens or hundreds of thousands of items — probably gives it more purchasing power, per item, than any other retailer, says Galanti.

Like other large chains such as Walmart and Target, Costco has also done its best to mitigate inflation by absorbing higher costs on many items, instead of automatically passing them along to shoppers.

It’s perhaps no surprise, then, that the retailer is No. 1 on Forbes’ inaugural Halo 100 list, powered by data provider HundredX, which measures which brands are most beloved by the customers they serve. Costco earned top marks for its quality products, prices and clean stores. The company declined an interview request for this article.

Costco has managed to hang onto a very loyal customer base, who pay $60 a year to come shop at the chain, even with stiff competition from Amazon and a rise in online shopping amid Covid-19 lockdowns. Membership renewal rates are over 90%, and the retailer added 10 million members during the pandemic. Shoppers often drop hundreds of dollars in a single visit, maybe stopping at the food court for a $1.50 hot dog or filling their tank with cheap gas, especially attractive as gas prices have hit a nationwide average of $3.32 a gallon, according to AAA.

The retailer has been slow to go online, but has been ramping up its e-commerce investments. It has been bulking up its online assortment and expanding its fulfillment operations to get items to customers’ doorsteps faster. Billionaire investor Charlie Munger, who is also a longtime Costco board member, recently commented that the company will “eventually be a huge internet player” capable of rivaling Amazon.

It has a reputation for paying employees well, too, which helps keep turnover rates low. Its starting wage of $16 is above the $12 offered by Walmart and $15 from Target, but below the $18 now offered by Amazon. Most stick around long enough to earn a raise or two, though. More than 60% of U.S. employees have worked at Costco for five or more years, with the average wage for hourly workers at about $24.


Please enter your comment!
Please enter your name here

Most Popular

Who is Iranians president Ebrahim Raisi, whose helicopter crashed in foggy weather?

Ebrahim Raisolsadati (Persian: 14 December 1960 – 19 May 2024), commonly known as Ebrahim Raisi was an Iranian politician who was the eighth president of Iran from 2021...

Helicopter Carrying Iranian President Crash

A helicopter carrying Iranian President Ebrahim Raisi crashed while visiting a northern region and his condition is currently unknown, Iranian state news agency IRNA...

The President Of Congo DRC Hon. Felix Tshisekedi Survives Death

This morning (19/5/2024) the palace of the Congo was attacked by a group of independent soldiers who had the mission to remove the president...

Video Shows Diddy Collecting Phones In His Yacht Party

Things are getting worse for the legend of hiphop music in the United States. In the video, Didy was seen collecting the phone numbers of...

Recent Comments