75 Million Customers Make Costco Wholesale Corporation (NASDAQ:COST) Tick
Costco Wholesale Corporation (NASDAQ:COST) is an interesting retailer and that is because the company has developed a number of strategies that allow it to excite customers and employees alike. The thinking at Costco is that nothing beats the lowest pricing and that happy employees equate to satisfied customers. Perhaps that also explains why Costco has been less affected by online shopping that is already threatening to take some retailers out of business. It’s also likely that its operation in grocery which is harder to logistically handle with ecommerce also protects the company.
Costco Wholesale Corporation (NASDAQ:COST) has more than 75 million customers in its membership program. The retailer is adding new members to its membership program at the rate of high-single digit percentage annually. Because of the membership program, Costco has succeeded in creating a solid base of loyal customers who some fondly call Costco addicts.
It is estimated that at least three million Costco members shop at the retailer daily. Because membership is expanding and members are becoming more addicted, Costco registered a 3% spike in revenue to $113.7 billion in fiscal 2015.
Costco is already the second-largest retailer in the country behind Wal-Mart Stores, Inc. (NYSE:WMT). The retailer continues to expand its footprint with plans to launch 32 new warehouses in 2016. Costco has 488 warehouses in the U.S., 90 in Canada with other warehouses scattered in the U.K., Mexico, Japan, Korea and Taiwan.
Given its membership program, Costco Wholesale Corporation (NASDAQ:COST) collects most of its profits one year in advance. The retailer derives 80% of gross margin and 70% of operating income from membership fees.
Costco Wholesale Corporation (NASDAQ:COST)’s lowest price offerings are a reason it has become an addiction for many shoppers. Additionally, that is also a major reason Costco has seen less disruption compared from online shopping compared to other retailers.
Costco operates a simplified store model that is easy for shoppers to navigate and also discover items that may interest them outside of the usual items they have come to expect from the retailers.
Costco Wholesale Corporation (NASDAQ:COST) has a high employee retention rate and that is partly because the retailer invests in making its workers happy. Costco believes that happy employees equate to happy and loyal customers.
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