While Costco is one of the most popular retailers in the US, shopping at the warehouse club comes with some drawbacks, the main one being that they are quite strict with their rules and quite slow to adapt to new technology, which often leaves customers needing to use outdated or unpopular payment methods that they might not use every day.
While they are slow to change, once they do is because they have gaged that the benefits will outweigh the drawbacks and that the majority of their clients will be on board with the change. The fact that their clients keep coming back despite the inconveniences caused by their refusal to just “get on with the times” allows them to adapt and not lose money making experimental changes that may or may not work.
And when they do decide to make a change, they do it well, ensuring that it is a seamless transition and that members will not be inconvenienced in any way. And lately they have been making some changes that focus around technology that members are sure to love. One of the changes is an app which allows members to see in store prices and availability, which was a smashing success if CFO Gary Millerchip is to be believed according to the statement that he made during Costco’s second quarter earnings call.
“We continue to make progress with our technology road map. The new warehouse tool in our app, which allows members to view local warehouse item availability and prices, had over 43 million visits.”
Other changes that are coming to Costco
But the company is not done just yet, as Millerchip added “We still have a lot of work to do in this area and are excited about the potential to improve the member experience through more relevant targeted messages and experiences.”
One of the ways they plan to do this is thanks to the new partnership that they have created with Affirm, which is not just another payment option for members, but it also allows them to choose a pay-over-time option for some purchases. “Split large purchases into smaller payments. Choose a monthly payment option from Affirm for your online orders of $500 or more,” Costco shared on its website.
Other changes that Costco has made are improve their curated marketplace, and increase the rewards on gas purchases, both of which Millerchip also mentioned as standout successes in the earnings call. As he explained “And Costco Next, our curated marketplace, also had record holiday sales. We are now approaching 100 vendor sites and significantly grew average order value in the quarter. […] Last quarter, we increased the reward on gas purchases at Costco locations to 5%,” he added.
Those changes have helped Costco continue to grow its sales.
“Turning now to our February sales results for the four weeks ended this past Sunday, March 2nd, compared to the same four retail calendar weeks last year. Net sales for the month of February came in at $19.81 billion, an increase of 8.8% from $18.21 billion last year,” Millerchip shared.
The one part where the warehouse retailer did not do as well is in their international sales, but there is still time for them to pick back up until the end of the year.
“Comparable sales for the month were as follows: U.S. comparable sales were up 8.6%, both with and without gas deflation. Canada comp sales were up 3.2% or 8.7% adjusted for gas deflation and FX. Other international comp sales were down 0.6% or up 6.5% adjusted,” he added. “This resulted in total company comp sales of 6.5% or 8.3% adjusted for gas deflation and FX.”