Millennials Love… Costco?
One typically wouldn’t think of pairing the words “Costco” and “Millennials” together in a sentence, but it looks like the members-only chain may be the new retail stomping grounds of younger consumers.
“We’re encouraged when we see the level of Millennials that are signing up” Richard Galanti, EVP and CFO of Costco, told investors recently. Indeed, the average age of a Costco member is now two years older than the national average age. It’s a trend the retailer has never seen before – in previous years, Costco members’ average age was 4 years over the median all Americans.
So why the sudden change?
Galanti attributes Costco’s extensive organic food selection and affordable pricing – particularly through their tests with coupon websites like LivingSocial – for the shift. In fact, finally tapping into the world’s largest consumer demographic may be the reason for Costco’s two percent increase in sales over the last 18 weeks alone.
Luckily, experts say the retailer is well positioned to handle their changing consumer base. “Costco’s low gross margin philosophy, combined with product nimbleness (given its limited <4,000 SKUs) and growing convenience, supports an outlook for the company to remain highly relevant in a fast-changing consumer environment,” said Kelly Bania, an analyst at BMO Capital Markets.
We’ve talked at length about the upswing of the organic industry in the past few years as younger consumers look towards a healthier lifestyle. And while millennials are willing to shell out a little extra cash for some things, they still have a keen eye when it comes to getting the best bang for their buck.
Want to brush up on your knowledge of millennial (and post-millennial) shopping habits? Check out these posts below!
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