Costco Wholesale, the king of suburban warehouse clubs, is putting some effort into looking more hip.
The warehouse retailer caters mostly to an older crowd — those with families and garages big enough to hold mammoth stacks of paper towels.
But as it announced lower than expected quarterly earnings Thursday, the company said it’s also taking incremental steps to draw in a younger demographic — a key strategy in an increasingly competitive, digitized environment rife with rival membership programs such as Amazon Prime.
So Costco has partnered with Google to conduct a same-day-delivery experiment in the San Francisco Bay Area, and has dabbled some in social media even as it strengthens its information-technology systems and its online commerce site.
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
Costco is also marketing more organic products. Chief Financial Officer Richard Galanti said on Thursday’s earnings call that organic beef and “giant packs of kale” help drive in younger customers. Costco can offer big savings on these relatively bigger ticket items and get better profit margins as well, Galanti said.
These ventures don’t mean the Issaquah-based retailer is going out of its way to cater to millennials. But they mean that Costco acknowledges shifting patterns in retail consumption, as online retailers increasingly invade the turf of brick-and-mortar giants.
“We’re not going to do anything rash but we’re also not going to have our head in the sand here,” Galanti said in the call.
Costco faces some challenges in drawing a younger clientele — its warehouses tend to be more suburban than urban, in part because “you’re not going to stick big vats of mayonnaise and big stacks of toilet paper in a small apartment,” said McAdams Wright Ragen analyst Dan Geiman.
Date: March 6, 2014