When the pandemic hit the US in March, as an essential business, Costco Warehouses stayed open. Under the immense pressure of overnight changes in product demand and requirements to supply warehouses at unprecedented volume, Costco Depots quickly shifted certain operations to 24 hours a day, seven days a week. Dedicated front line workers kept the Warehouses open.
As a result of the craziness of 2020, Costco rose to the occasion and their business numbers were outstanding.
Net sales increased to $163 million. 9% increase from 2019.
Membership increased from 99M to 105.5M globally which added $3.54B in revenue.
After a mid-year dip, renewal rates held firm from 2019 at an impressive 91% in the US and 88% worldwide.
13 new warehouses were opened. Bringing the total warehouses to 803 globally.
Employees increased 7.5% from 254,000 to 273,000 worldwide.
US/Canada and California sales lead the way
US/Canada are responsible for 87% of net sales. 29% of the US sales are in California. This further proves that managing your packaging, warehousing and distribution in California is the ideal position for cost.
Kirkland Brand saw major gains in 2020
Sales of Kirkland products grew by 7% with global sales exceeding $52 billion.
eCommerce business saw an overall 50% increase in sales. Increases were evident in same day and 2-day grocery deliveries, prescription medications, electronics, and office supplies. Additional strong sales were seen in apparel, appliances, health and beauty products, and home furnishings.
Even more astonishing, for the 13-week period ending Nov. 29, Costco’s total comparable sales were up 14.5%. eCommerce, specifically, was up 82% compared with the same period in 2019.
Will Costco reduce warehouses based on their eCommerce success?
In an interview on Dec 14, 2020 with CNBC, Craig Jelinek:
The company’s physical warehouses will remain critical going forward, even though the wholesale retailer saw a surge in eCommerce sales during the coronavirus pandemic.
“It’s still important to get people physically in the stores. I still think brick-and-mortar is not going to go away,”
Costco expects to expand their buildings by 20 in 2021 so the push for getting customers into Warehouses is not slowing down.
What does all this mean for your packaging?
In-person shopping at Costco Warehouse will continue to be stronger than ever while being supplemented by eCommerce. The Costco Warehouse "treasure hunt", Food Court, wine and rotisserie chicken and a growing membership base are all reasons why the Costco Warehouse visits are not going to go away.
The growing success of the Kirkland Brand and Costco's success of knowing how to properly design packaging for their brand to drive sales makes them a worthy competitor in many segments.
Your packaging and pallet displays will continue to be one of the main drivers to increasing your Costco Warehouse sales. Make sure your packaging is also able to survive the eCommerce shipping environment as that channel of Costco's business continues to grow.
If you are lucky enough to find yourself in a position where your product is already in Costco or you are being considered as a supplier, great job. Make sure to ensure that you are doing your packaging design and branding right.
As always, reach out to us for questions or advice.
Until next time.
Happy Holidays and Happy New Year!