Costco History from Warehouse Club Focus
“The warehouse club industry began when The Price Club opened its first location in San Diego, California in 1976. The initial strategy only allowed small business owners to become members. However, sales at that initial location were not strong.
As a result, The Price Club’s membership program was expanded to include consumers such as public service employees, government employees and selected banks and financial institutions. Consumer members provided traffic and the opportunity for larger sales. With that change, The Price Club thrived with sales of both wholesale and consumer members growing in tandem.
Costco opened its first location in 1983 in Seattle, Washington and, like The Price Club, focused primarily on the business member but also opened its membership to consumers. However, over time, Costco recognized that consistent long-term growth would come from selling high quality merchandise at a value to consumer or non-business members.
Costco’s consistent and growing focus on the consumer member is reflected in the composition of its membership and its item assortment. According to its annual reports, Costco’s percentage of paid consumer members has consistently increased from 46% in 1988 to 62% in 2001 to 82% in 2022.
Based on WCF research, the number of items that Costco targets to wholesale members has consistently decreased from 1,044 products in 2008 to 699 SKUs in 2018 to 616 items in 2021 to 563 products in 2022."
The February 24, 2023 issue of Warehouse Club Focus was published and features observations from Costco locations in Washington. The March 17, 2023 issue will feature analysis of the bakery, deli, produce and fresh meat departments. To read these issues, sign up for a trial subscription at: https://lnkd.in/eMNhYi8N.
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