Motley Fool - Sat Jul 16, 2022
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Costco has a lot to offer its 117 million members worldwide. It is one of the most popular warehouse wholesalers with 833 warehouses. According to the analytics firm Numerator, 37% of Americans shop at Costco. As per Insider, Costco’s standard shopper is likely to be an Asian American married woman, and between the ages of 35 to 44. Here is other information on the typical Costco shopper and how much they spend per trip.
Meet Costco’s typical shopper
As per Insider, Costco’s standard shopper is likely to be an Asian American married woman, has a college degree or higher level of education, is between the ages of 35 to 44, and makes more than $125,000. She also lives in a city in the Pacific Northwest. (Costco was founded in Seattle, Washington.)
The average customer shops at Costco on a Saturday or Sunday every two to three weeks, about 23 trips a year. They also purchase nine items with a total cost of $114 per shopping trip. The next most popular age group to shop at Costco is over 65, the next most popular races are Causasian and Hispanic, and the next most popular income levels are $100,000 to $125,000, followed by those earning $80,000 to $100,000.
Loyal members
Costco’s success is based on membership loyalty and growth. Costco’s membership format "is designed to reinforce member loyalty and provide continuing fee revenue." Costco’s member renewal rate was 91% in the U.S. and Canada and 89% worldwide. On the most recent earnings call, Richard Galanti, executive vice president and chief financial officer for Costco, stated that member renewal rates were increasing due to members using the auto-renew feature.
He also said an increasing number of Executive members were renewing at a higher rate than Gold Star or Business members. Membership fees are currently $60 for Gold Star members and $120 for Executive members. Total sales for Costco in 2021 were $192 billion, an increase of 18% from 2020. Costco’s net income, or profit, increased by 25% to $5 billion. Last year, Costco brought in $3.9 billion in membership fees, a 9% increase from the prior year. One way to look at Costco’s numbers is that its membership fees made up almost 80% of its profit.
Costco has over half of the wholesale club market (55.5%) and a single Costco location makes on average $526,000 per day, close to $200 million a year. Costco saw incredible growth in 2021, with its revenue increasing by almost one-fifth from the previous year. Costco has a devoted following who enjoy the savings made possible by shopping at the warehouse store, and there is no sign that member loyalty or their spending habits are fading.
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