12 ms·

The Resilience of Costco (2018)

138 points by awiesenhofer 3y ago

erhaetherth 3y ago
According to that site, Costco has 741 stores. And 3 of them are within 10 minutes of me. Noice.
- bombcar 3y ago
  They're up to 855, but 3 within 10 minutes of you (e.g, three within 20 minutes of each other) is pretty darn dense. But now that I think of it, you can probably get that in Southern California in multiple areas. That's a circle with 314 sq miles inside.
  - genocidicbunny 3y ago
    If we're counting 10 minutes as the crow flies, then in the east cupertino/west SJ area, you're probably in range of 8 costcos, including a business center one. Granted, with bay area traffic, that's more like an hour of driving, but it's still pretty dense.
- VirusNewbie 3y ago
  SoCal? LA/OC?
  - pxmpxm 3y ago
    NYC I'm guessing
rylittle 3y ago
I love this format of ingesting information
RationPhantoms 3y ago
I love Costco, truly. I love the lack of mental noise I feel when I browse the aisles. I love the selection of goods and pricing leverage they have on manufacturers and their competitors. However, Costco's technology is woefully inadequate for a wholesaler of their size. I've even heard this from Costco employees dealing with their employees portal (shout to /r/costco). Lack of sufficient tech is a systemic issue with them. How is it possible that they cannot give me an accurate inventory of the items in the stores near me? Sometimes I see a product on social media and think "Hey it would be great to know if that product is only offered in Southwest US Costcos. Even trying to find a map of the store and where the products are kept (when there is some flux) is troublesome (yes, I get it's the "Ikea" method of needing to push you through the entire store).
- ShadowBanThis01 3y ago
  I agree, but the fact is probably that they don't want you to know. They want you to have to show up and end up buying stuff. They also continually rearrange their stores for no apparent reason, so you're wandering around looking for the same item you bought two weeks ago. I like Costco, but have considered abandoning it because I'm sick of staple items I've bought for years there just... disappearing. You drive over there and start scouring the aisles for, say, brown rice. NOPE. They just don't have it anymore. And in many cases it's KIRKLAND products. I understand that a supply of something might temporarily dry up, but then I wish Costco would replace it with the same thing from another supplier at full price if need be. Then at least I can get my shopping done without driving all over town. If I'm going to have to do that, screw it; I'll just go to the regular grocery store.
  - OfSanguineFire 3y ago
    If you want brown rice in bulk for cheap, have you considered immigrant stores? I ask because I used to go to Makro (the Central European membership-based wholesale chain) for rice, but then I learned that shops serving Indian Subcontinent and Vietnamese diasporas offered rice and other nice things in bulk for prices comparable to that mainstream wholesaler.
  - fouc 3y ago
    KIRKLAND is Costco's brand, it's a white label of a consistent reliable product. Your favorite brown rice brand could've ended up appearing as a kirkland product. I'm surprised at the shortage of brown rice though, last time I went into Costco I was amazed at the sheer number of gluten free, keto friendly, organic friendly etc products.
    - bombcar 3y ago
      The most obvious case of that is the KIRKLAND tortilla chips, they don't even try to hide who makes them. https://images.costcobusinessdelivery.com/ImageDelivery/imageService?profileId=12028466&itemId=44004&recipeName=680&viewId=1 https://images.costcobusinessdelivery.com/ImageDelivery/imag...
r00tbeer 3y ago
This is from June, 2018. (That should be in the title.) I'm curious how the last five years have been for Costco.
- bombcar 3y ago
  Looks good: https://www.macrotrends.net/stocks/charts/COST/costco/gross-profit https://www.macrotrends.net/stocks/charts/COST/costco/gross-... And the stock is now at 563 so more than doubled in 5 years, not too shabby.
- jandrese 3y ago
  Being crushed by Amazon’s purchase of Whole Foods certainly didn’t come to pass, that seemed to be the big threat this slide deck was discussing, no doubt in response to some talking heads over on the financial channels who’s hair was on fire because Amazon was going to outcompete all grocery stores and drive them out of business, even Costco.
latchkey 3y ago
I can appreciate why Costco appeals to people. I would go maybe 1-2 times a year to pick up a few items. That said, once they started hard enforcing the card sharing policy and then proceeded to literally scream at me that I couldn't use my fathers card, while in line, I decided to not give them my business ever again. I had used his card a couple times before without any issues. It wasn't even a busy day and I really didn't get the hostility that I received. Certainly, I got some stressed out check out person, but wow... me never going back there again is going to cost them a whole lot more in the long run, than them missing out on my membership fee from my occasional visit.
- kgermino 3y ago
  > me never going back there again is going to cost them a whole lot more in the long run, than them missing out on my membership fee from my occasional visit. That’s actually not really true for Costco. They famously break even on selling merchandise as a way to sell the memberships. It’s unfortunate but the model really doesn’t care about occasional visitors like you. Not excusing the attitude, that sounds completely unacceptable, but blocking shared memberships is core to their approach.
  - latchkey 3y ago
    I find it hard to believe that they don't profit on their products at least a bit. Certainly there are some they don't get a profit on, but it wasn't like I was in there just buying a cheap tv and walking out... I was buying regular stuff.
    - Skunkleton 3y ago
      Its their model. Its discussed in TFA too.
    - dragonwriter 3y ago
      > I find it hard to believe that they don’t profit on their products at least a bit. Basically, they don’t. Over recent years, membership fees have accounted for, from what I can find, a low of 80% to a high of 110% of their net income, usually sitting right around 100%, and that’s not an accident, its their well-documented deliberate business model. Selling stuff covers the costs associated with being able to sell the stuff, membership fees are what provides profit.
ravetcofx 3y ago
I really don't like supporting Costco as it's the antithesis to good urban design. It's not healthy for people to be living so separated from shops that stores like costco end up with 1000 car parking lots. Grocery stores should be on every other corner or so of every neighborhood within walking distance. Prices would be kept low due to healthy small business competition. Costco is mearly a symptom of the sickness that is Euclidean zoning.
- niam 3y ago
  I think about this a lot as an avid lover of Costco. I'm fortunate enough to be able to travel by PEV/Bike to one but there's another Costco near me which is assailed on all sides by freeways and would be impossible to reach by anything other than car.
- epcoa 3y ago
  Then good urban design is wrong.
- oh_sigh 3y ago
  There are at least 3 costcos that I know of in NYC and they are always packed. Even those living in hyperbolic zoning love costco.
  - ravetcofx 3y ago
    Hyperbolic zoning, I like it, that's clever
  - deleted 3y ago
    [deleted]
- caminante 3y ago
  Costco has a markup cap of 15% which keeps prices low. Their parking lots are also also the standard for customer friendly design with the buffer spacing that sacrifices car density. Tl;dr: I wouldn't choose Costco to make your argument, LOL.
- code_duck 3y ago
wanderingmind 3y ago
Here down under, Costco is the first place I and a lot of people I know go to to buy not just household stuff, but electronics, appliances, clothes, shoes and everything possible. Kirkland is a brand I will buy with my eyes closed. The way they were able to retain quality through covid supply chain issues while every other major brand has regressed in quality is nothing short of a miracle.
jacknews 3y ago
I like their curated inventory model, and focus on quality, value, bulk sizes, etc. It's almost a stake in the heart of consumer marketing and retail, which seems to be all about bamboozling customers with endless new products or packaging, and dressing up staples with new marketing angles or features, eg 'marine hydrocolloids' or whatever the latest BS in cosmetics is, before that 'microbeads' (aka glitter), etc.
jandrese 3y ago
The age of this article is very apparent with the continued discussion of Amazon’s purchase of Whole Foods. If that was supposed to be a massive shock to the grocery business it is a long time in coming. Most people forgot it even happened with how little it changed the world.
skybrian 3y ago
It seems like a decent slide deck, but what's the deal with this anonymous blog with the odd domain name?
- kortilla 3y ago
  That’s how the Internet was before corporate inundated shit and “real name” social media.
  - syndicatedjelly 3y ago
    [dead]
DrFunke 3y ago
For the past year I've noticed their cashiers are oddly hostile. I've just not been digging the vibe of the store lately. I pay $60 for membership. You don't need to treat me like a potential criminal who may be using someone else's card. Anyway, I have two Discover cards (0% apr for 12 months) that gave me 10% cash back at Costco.com. I purchased $3000 worth of Costco giftcards & will be using them in lieu of membership in the store when mine expires (a little known store loophole). I'd like to think it's in the spirit of Steve Jobs leasing cars for one month at a time to avoid license plates.
- adave 3y ago
  And you wonder why they turn hostile, pay the $60 fee you cheapskate.
  - DrFunke 3y ago
    A cashier will never speak down to me. As god as my witness I will crash this company with no survivors.
    - syndicatedjelly 3y ago
      [dead]
- ZeroSolstice 3y ago
  I'm not sure what you are hinting at by saying "like a potential criminal who may be using someone else's card." Were you using someone else's card or not? Its a membership based store and your card is what validates that status. What exactly was the scenario you found yourself in? maiden vs. married name? Picture scratched up? It looks like from reviews left that the Costco Shop gift card[1] is a one time use. How they would know that, maybe via system tracking, I'm not sure. It would seem that you would have to have a new card every time you go verse a single card with $3k on it. Other reviews seem to indicate that they check the member that gave you the card which after the first year of renewal you would not be able to show since your membership lapsed. [1] https://www.costco.com/costco-shop-card.product.10024438.html https://www.costco.com/costco-shop-card.product.10024438.htm...
tragomaskhalos 3y ago
Our nearest Costco (Wembley in London) has an ophthalmology section that does eye tests as well as (competitively priced of course) eye glasses. That's some confident branching out from the traditional retail domain.
deleted 3y ago
[deleted]
deleted 3y ago
[deleted]
FrustratedMonky 3y ago
On one slide showed big dip in profit in 2009. What was it? I don't think it was just the 2008 economy downturn.
- syndicatedjelly 3y ago
  [dead]
insane_dreamer 3y ago
We (family of 4) shop at Costco every 2 weeks; get all of our staples, fruit/veggies (we eat a lot of that and they have a very good selection of organics), cheese (good selection, much cheaper than other stores); great deals on wine too, and sometimes beer when they carry our craft beer of choice (our local Costco has a lot of nice craft beer), dog food, etc. Some favorites we don't find elsewhere at that quality/price are the Kirkland organic tortilla chips, toasted seaweed (kids' favorite), organic flour tortillas (freeze them and they last), roasted almonds, dried fruit (figs, apricots), reduced sugar fruit spread, etc. For a big wholesaler we find they have a very good selection of healthier food (as healthy as you can get in the US, but that's another story), at least in our city. I find the layout to be pretty consistent and we know where to go to get our regular purchases. Often along the way we'll see something we haven't tried before and get that, though you do sometimes find that they stop carrying it, or it was seasonal, but I can live with that. What we don't buy there is meat, fish, milk, eggs, all of which we buy at local grocer (sourced locally), plus we're not big meat eaters and don't want to fill up a freezer with it. Besides that, we get some specialty stuff at Trader Joe's (a nice place to shop and the best checkout staff ever -- I think they attract the right kind of employees, a bit like REI). And that's about it. None of those companies are perfect but I feel like they pay and treat their employees well. We shun Safeway/Albertsons/Kroger, and don't get me started on Walmart. I truly hate Walmart for having destroyed so many US towns--will never give them my money.
- coolbreezetft22 3y ago
  What's with wrong Safeway? I much prefer shopping there over Costco. Going to Costco is a stressful unpleasant experience starting from the insane parking lot filled with oversized vehicles. The inside is a dimly-lit warehouse packed with zombie-like shoppers making a b-line behind their oversized shopping carts for the overrated kirkland toilet paper (yep I said it!) A grocery store like safeway I find much more relaxing and laid back and doesn't have obnoxiously large quantities & packaging. That said I've been invested in costco stock for a long time because I recognize the cult-like devotion of their shoppers.
  - syndicatedjelly 3y ago
a2xd94 3y ago
Let's take a moment to appreciate some excellent minimalist UI of this site and especially the slides on this topic. Simple. Clean. To the point.
somsak2 3y ago
> customers prefer the convenience of shopping online Things have actually been flat for ~3 years now https://fred.stlouisfed.org/series/ECOMPCTSA https://fred.stlouisfed.org/series/ECOMPCTSA

138 points by awiesenhofer 3y ago

erhaetherth 3y ago

According to that site, Costco has 741 stores. And 3 of them are within 10 minutes of me. Noice.

bombcar 3y ago
They're up to 855, but 3 within 10 minutes of you (e.g, three within 20 minutes of each other) is pretty darn dense. But now that I think of it, you can probably get that in Southern California in multiple areas. That's a circle with 314 sq miles inside.
- genocidicbunny 3y ago
  If we're counting 10 minutes as the crow flies, then in the east cupertino/west SJ area, you're probably in range of 8 costcos, including a business center one. Granted, with bay area traffic, that's more like an hour of driving, but it's still pretty dense.
VirusNewbie 3y ago
SoCal? LA/OC?
- pxmpxm 3y ago
  NYC I'm guessing

rylittle 3y ago

I love this format of ingesting information

RationPhantoms 3y ago

I love Costco, truly. I love the lack of mental noise I feel when I browse the aisles. I love the selection of goods and pricing leverage they have on manufacturers and their competitors. However, Costco's technology is woefully inadequate for a wholesaler of their size. I've even heard this from Costco employees dealing with their employees portal (shout to /r/costco). Lack of sufficient tech is a systemic issue with them. How is it possible that they cannot give me an accurate inventory of the items in the stores near me? Sometimes I see a product on social media and think "Hey it would be great to know if that product is only offered in Southwest US Costcos. Even trying to find a map of the store and where the products are kept (when there is some flux) is troublesome (yes, I get it's the "Ikea" method of needing to push you through the entire store).

ShadowBanThis01 3y ago
I agree, but the fact is probably that they don't want you to know. They want you to have to show up and end up buying stuff. They also continually rearrange their stores for no apparent reason, so you're wandering around looking for the same item you bought two weeks ago. I like Costco, but have considered abandoning it because I'm sick of staple items I've bought for years there just... disappearing. You drive over there and start scouring the aisles for, say, brown rice. NOPE. They just don't have it anymore. And in many cases it's KIRKLAND products. I understand that a supply of something might temporarily dry up, but then I wish Costco would replace it with the same thing from another supplier at full price if need be. Then at least I can get my shopping done without driving all over town. If I'm going to have to do that, screw it; I'll just go to the regular grocery store.
- OfSanguineFire 3y ago
  If you want brown rice in bulk for cheap, have you considered immigrant stores? I ask because I used to go to Makro (the Central European membership-based wholesale chain) for rice, but then I learned that shops serving Indian Subcontinent and Vietnamese diasporas offered rice and other nice things in bulk for prices comparable to that mainstream wholesaler.
- fouc 3y ago
  KIRKLAND is Costco's brand, it's a white label of a consistent reliable product. Your favorite brown rice brand could've ended up appearing as a kirkland product. I'm surprised at the shortage of brown rice though, last time I went into Costco I was amazed at the sheer number of gluten free, keto friendly, organic friendly etc products.
  - bombcar 3y ago
    The most obvious case of that is the KIRKLAND tortilla chips, they don't even try to hide who makes them. https://images.costcobusinessdelivery.com/ImageDelivery/imageService?profileId=12028466&itemId=44004&recipeName=680&viewId=1 https://images.costcobusinessdelivery.com/ImageDelivery/imag...

r00tbeer 3y ago

This is from June, 2018. (That should be in the title.) I'm curious how the last five years have been for Costco.

bombcar 3y ago
Looks good: https://www.macrotrends.net/stocks/charts/COST/costco/gross-profit https://www.macrotrends.net/stocks/charts/COST/costco/gross-... And the stock is now at 563 so more than doubled in 5 years, not too shabby.
jandrese 3y ago
Being crushed by Amazon’s purchase of Whole Foods certainly didn’t come to pass, that seemed to be the big threat this slide deck was discussing, no doubt in response to some talking heads over on the financial channels who’s hair was on fire because Amazon was going to outcompete all grocery stores and drive them out of business, even Costco.

latchkey 3y ago

I can appreciate why Costco appeals to people. I would go maybe 1-2 times a year to pick up a few items. That said, once they started hard enforcing the card sharing policy and then proceeded to literally scream at me that I couldn't use my fathers card, while in line, I decided to not give them my business ever again. I had used his card a couple times before without any issues. It wasn't even a busy day and I really didn't get the hostility that I received. Certainly, I got some stressed out check out person, but wow... me never going back there again is going to cost them a whole lot more in the long run, than them missing out on my membership fee from my occasional visit.

kgermino 3y ago
> me never going back there again is going to cost them a whole lot more in the long run, than them missing out on my membership fee from my occasional visit. That’s actually not really true for Costco. They famously break even on selling merchandise as a way to sell the memberships. It’s unfortunate but the model really doesn’t care about occasional visitors like you. Not excusing the attitude, that sounds completely unacceptable, but blocking shared memberships is core to their approach.
- latchkey 3y ago
  I find it hard to believe that they don't profit on their products at least a bit. Certainly there are some they don't get a profit on, but it wasn't like I was in there just buying a cheap tv and walking out... I was buying regular stuff.
  - Skunkleton 3y ago
    Its their model. Its discussed in TFA too.
  - dragonwriter 3y ago
    > I find it hard to believe that they don’t profit on their products at least a bit. Basically, they don’t. Over recent years, membership fees have accounted for, from what I can find, a low of 80% to a high of 110% of their net income, usually sitting right around 100%, and that’s not an accident, its their well-documented deliberate business model. Selling stuff covers the costs associated with being able to sell the stuff, membership fees are what provides profit.

ravetcofx 3y ago

I really don't like supporting Costco as it's the antithesis to good urban design. It's not healthy for people to be living so separated from shops that stores like costco end up with 1000 car parking lots. Grocery stores should be on every other corner or so of every neighborhood within walking distance. Prices would be kept low due to healthy small business competition. Costco is mearly a symptom of the sickness that is Euclidean zoning.

niam 3y ago
I think about this a lot as an avid lover of Costco. I'm fortunate enough to be able to travel by PEV/Bike to one but there's another Costco near me which is assailed on all sides by freeways and would be impossible to reach by anything other than car.
epcoa 3y ago
Then good urban design is wrong.
oh_sigh 3y ago
There are at least 3 costcos that I know of in NYC and they are always packed. Even those living in hyperbolic zoning love costco.
- ravetcofx 3y ago
  Hyperbolic zoning, I like it, that's clever
- deleted 3y ago
  [deleted]
caminante 3y ago
Costco has a markup cap of 15% which keeps prices low. Their parking lots are also also the standard for customer friendly design with the buffer spacing that sacrifices car density. Tl;dr: I wouldn't choose Costco to make your argument, LOL.
code_duck 3y ago

wanderingmind 3y ago

Here down under, Costco is the first place I and a lot of people I know go to to buy not just household stuff, but electronics, appliances, clothes, shoes and everything possible. Kirkland is a brand I will buy with my eyes closed. The way they were able to retain quality through covid supply chain issues while every other major brand has regressed in quality is nothing short of a miracle.

jacknews 3y ago

I like their curated inventory model, and focus on quality, value, bulk sizes, etc. It's almost a stake in the heart of consumer marketing and retail, which seems to be all about bamboozling customers with endless new products or packaging, and dressing up staples with new marketing angles or features, eg 'marine hydrocolloids' or whatever the latest BS in cosmetics is, before that 'microbeads' (aka glitter), etc.

jandrese 3y ago

The age of this article is very apparent with the continued discussion of Amazon’s purchase of Whole Foods. If that was supposed to be a massive shock to the grocery business it is a long time in coming. Most people forgot it even happened with how little it changed the world.

skybrian 3y ago

It seems like a decent slide deck, but what's the deal with this anonymous blog with the odd domain name?

kortilla 3y ago
That’s how the Internet was before corporate inundated shit and “real name” social media.
- syndicatedjelly 3y ago
  [dead]

DrFunke 3y ago

For the past year I've noticed their cashiers are oddly hostile. I've just not been digging the vibe of the store lately. I pay $60 for membership. You don't need to treat me like a potential criminal who may be using someone else's card. Anyway, I have two Discover cards (0% apr for 12 months) that gave me 10% cash back at Costco.com. I purchased $3000 worth of Costco giftcards & will be using them in lieu of membership in the store when mine expires (a little known store loophole). I'd like to think it's in the spirit of Steve Jobs leasing cars for one month at a time to avoid license plates.

adave 3y ago
And you wonder why they turn hostile, pay the $60 fee you cheapskate.
- DrFunke 3y ago
  A cashier will never speak down to me. As god as my witness I will crash this company with no survivors.
  - syndicatedjelly 3y ago
    [dead]
ZeroSolstice 3y ago
I'm not sure what you are hinting at by saying "like a potential criminal who may be using someone else's card." Were you using someone else's card or not? Its a membership based store and your card is what validates that status. What exactly was the scenario you found yourself in? maiden vs. married name? Picture scratched up? It looks like from reviews left that the Costco Shop gift card[1] is a one time use. How they would know that, maybe via system tracking, I'm not sure. It would seem that you would have to have a new card every time you go verse a single card with $3k on it. Other reviews seem to indicate that they check the member that gave you the card which after the first year of renewal you would not be able to show since your membership lapsed. [1] https://www.costco.com/costco-shop-card.product.10024438.html https://www.costco.com/costco-shop-card.product.10024438.htm...

tragomaskhalos 3y ago

Our nearest Costco (Wembley in London) has an ophthalmology section that does eye tests as well as (competitively priced of course) eye glasses. That's some confident branching out from the traditional retail domain.

deleted 3y ago

[deleted]

deleted 3y ago

[deleted]

FrustratedMonky 3y ago

On one slide showed big dip in profit in 2009. What was it? I don't think it was just the 2008 economy downturn.

syndicatedjelly 3y ago
[dead]

insane_dreamer 3y ago

We (family of 4) shop at Costco every 2 weeks; get all of our staples, fruit/veggies (we eat a lot of that and they have a very good selection of organics), cheese (good selection, much cheaper than other stores); great deals on wine too, and sometimes beer when they carry our craft beer of choice (our local Costco has a lot of nice craft beer), dog food, etc. Some favorites we don't find elsewhere at that quality/price are the Kirkland organic tortilla chips, toasted seaweed (kids' favorite), organic flour tortillas (freeze them and they last), roasted almonds, dried fruit (figs, apricots), reduced sugar fruit spread, etc. For a big wholesaler we find they have a very good selection of healthier food (as healthy as you can get in the US, but that's another story), at least in our city. I find the layout to be pretty consistent and we know where to go to get our regular purchases. Often along the way we'll see something we haven't tried before and get that, though you do sometimes find that they stop carrying it, or it was seasonal, but I can live with that. What we don't buy there is meat, fish, milk, eggs, all of which we buy at local grocer (sourced locally), plus we're not big meat eaters and don't want to fill up a freezer with it. Besides that, we get some specialty stuff at Trader Joe's (a nice place to shop and the best checkout staff ever -- I think they attract the right kind of employees, a bit like REI). And that's about it. None of those companies are perfect but I feel like they pay and treat their employees well. We shun Safeway/Albertsons/Kroger, and don't get me started on Walmart. I truly hate Walmart for having destroyed so many US towns--will never give them my money.

coolbreezetft22 3y ago
What's with wrong Safeway? I much prefer shopping there over Costco. Going to Costco is a stressful unpleasant experience starting from the insane parking lot filled with oversized vehicles. The inside is a dimly-lit warehouse packed with zombie-like shoppers making a b-line behind their oversized shopping carts for the overrated kirkland toilet paper (yep I said it!) A grocery store like safeway I find much more relaxing and laid back and doesn't have obnoxiously large quantities & packaging. That said I've been invested in costco stock for a long time because I recognize the cult-like devotion of their shoppers.
- syndicatedjelly 3y ago

a2xd94 3y ago

Let's take a moment to appreciate some excellent minimalist UI of this site and especially the slides on this topic. Simple. Clean. To the point.

somsak2 3y ago

> customers prefer the convenience of shopping online Things have actually been flat for ~3 years now https://fred.stlouisfed.org/series/ECOMPCTSA https://fred.stlouisfed.org/series/ECOMPCTSA