75 Million Customers Make Costco Wholesale Corporation (NASDAQ:COST) Tick

Share on FacebookTweet about this on TwitterShare on Google+Share on RedditShare on LinkedInPrint this pageEmail this to someone

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.

 Expanding footprint

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.

Advance profits

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.

Lowest price

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.

Simple model

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.

Friendly-labor attitude

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.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

You may also like...

Read previous post:
Facebook Inc (NASDAQ:FB)
Facebook Inc (FB) Is Taking Pre-Orders for Oculus Rift Computer Bundles

Facebook Inc (NASDAQ:FB) is taking pre-orders for its much-awaited Oculus Rift computer bundles. The company is trying to enter the...

Close