Costco sees uptick in store traffic and membership renewals as shoppers realize value of mass & club channel

In its Q4 2022 financial earnings report, Costco’s net sales for the quarter increased 15.2% to $70.76bn compared to $61.44bn in Q4 2021. In the US, sales were up 9.6% (excluding gas inflation) for the quarter compared to the same period last year.

Costco reported a 5.2% (7.2% worldwide) increase in shopper traffic for the quarter compared to Q4 2021. In addition, the average transaction amount was up 10% in the quarter in the US (up 6% worldwide).

Speaking on the company’s Q4 2022 earnings call, Costco CFO Richard Galanti said that consumers are increasingly recognizing the value mass and club stores can offer during times of economic uncertainty. 

“That’s the one thing I think we’re good at, is figuring out how to drive people into the door with hot items, and that’s helped us as well,”​ said Galanti. 

Light at the end of the tunnel?

Costco Grocery sales were up 20% for the quarter compared to the same period last year with the best-performing categories being candy, frozen, and bakery and deli, noted Galanti.

While the latest Consumer Price Index (CPI) for food at home was up 13.5% on a year-on-year basis in August 2022 vs. August 2021, Costco has managed to keep the cost of its products somewhat tame, according to Galanti.

“For the fourth quarter and talking with our merchants, the estimated price inflation overall was about 8%,”​ he said, adding that  the company is seeing commodity pricing for key commodities come down slightly signaling “some beginnings of some light at the end of that tunnel.”

Kirkland Signature

So how are consumers shopping at Costco? And is the retailer noticing trade-down behavior from shoppers looking for the best possible deal?

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