Will Costco have to change with the times?
Filed under: Economy, Earnings
Two years ago, my wife and I walked out of our local Costco Wholesale Corp. (COST) because the checkout lines were too long. That's not a problem any longer.On weekends, the place seems busier than a beehive but it is less crowded than it used to be. People -- mostly middle class from what I can tell -- saunter up and down the warehouse store with a year's supply of toothpaste, laundry detergent and the biggest chocolate cakes you have ever seen in your life stuffed into their carts. Of course, there are the free samples. My favorite sample provider is the "crab man." He is an elderly gentleman who pushes seafood dip and bellows in a voice that sounds like it has gargled with rusty nails for decades "you don't have to be a crab to like crabs." Top that off with the $1.50 hot dog-and-soda lunch special and you have got a full afternoon.
Or do you?
Costco sales were down 6 percent in June. U.S. same-store sales plunged 6 percent, and international sales fell 3 percent. Though that was in-line with Wall Street expectations, it does underscore the problems facing this former Wall Street darling whose shares have dropped 12 percent this year. The bargain-hunting consumers that fueled Costco's growth are shopping at Wal-Mart Stores Inc. (WMT).
Costco can be an infuriating place to shop. Merchandise that's there one week isn't there the next. Sizes of some goods are just too large to be practical for most families without a spare refrigerator or freezer or two. But Costco is hardly alone in its troubles.
Many retailers today reported weak June sales as consumers continued to be reluctant to part with their cash because of their worries about the economy. Reuters notes that among the companies posting disappointing results were Wet Seal Inc., (WTSLA), where same-store sales dropped 11 percent, The Children's Place Retail Stores Inc. (PLCE), whose same-store sales plunged 12 percent, and Stage Stores Inc. (SSI), whose comp sales plummeted 12.6 percent.
Economists are predicting that the U.S. will begin to claw its way from the recession in September. Maybe the "crab man" will be able to expand his product line.
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Reader Comments (Page 1 of 1)
7-09-2009 @ 12:57PM
bill said...
The dumb asses only accept American express as a credit card and for no reason after 15 yrs they told me they are closing my account at American Express. Never had a balance and paid it at months end . therefore since I cant charge anymore instead of cash , I joined Sam"s club. I'm one person thats about 100 bucks a month Do the math Costco. It was your loss.
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7-09-2009 @ 1:54PM
Cindi said...
Well, I for one really like Costco. To be fair you have to understand how they operate. I hear all the time that the quantity of food items or the multipackaging turns consumers off. I can use the 3 pack ketchup, the 36 roll bath tissue and the 3 pack ziploc bags and the 4 1lb packs of butter. They have a short turn around, so what tha means is if you see something and you want it, you better get it now as maybe next week it will be gone. They seel a lot of items that I would only use for entertaining purposes, for example the ginormous chocolate cake or some of thier other baker items. We shop there every two weeks or so and with the 100.00 membership fee and the 2 percent reward, it more than pays for our membership. I see single people and couples there besides large families, anybody can find anything there, especially the seasonal items. Our son recently bought a house and has recently moved out and we went and loaded up on all the usual necessities he needed. I work in a retail, and our prices at my store I work at cannot even come close to Costco, even though Costco has a different merchandising environment, nobody has come close , not even Sams Club, which I have never been in, however, I know some who have and thye say it doesnt compare to Costco at all. Long lines? Go early or go on a weekday at 2pm, never a line. Costco has an agreement with American Express, so use a debit card and/or write a check, no problem,
7-16-2009 @ 4:40PM
JOI said...
AS A SHAREHOLDER. COSTCO HAS TO STOP WITH ALL THE RETURNS THEY TAKE UNLESS THERE IS AN ACTUAL NEED. THIS HAS COST THE COMPANY A FORTUNE.....I SEE THE LINES AT THE STORES ON RETURNS THAT SHOULD NOT BE MADE.
ON LARGE TV AND ELECTRONIC THEIR RETURN POLICY IS TOO LONG....
OFFER IDEAS HOW CONSUMERS CAN AND ARE SAVING MONEY BY BUYING AT COSTCO. SHAME ITEMS WITH FAMILY AND FRIENDS....
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