With Costco preparing to reveal its fourth-quarter and full-year financial results, traffic-tracker Placer.ai points out that the company is on a roll with more footsteps through the store during the past couple of years and, more recently, during the back-to-school season.
According to Petrack, Costco seems to have weathered the headwinds facing the wider retail space earlier in 2023, with monthly visits to its clubs between June and August 2023 up relative to the equivalent months in 2022. Although some of the growth in foot traffic is due to the company’s ongoing expansion, same-store visits are also on the rise with the average per venue gaining year-over-year between June and August 2023 as well.
Costco’s ability to open new stores without cannibalizing traffic from its existing locations speaks to the strong demand for the concept, Petrack noted and suggests that the chain has yet to maximize its expansion potential.
Between January and August 2023, Costco saw a year-over-year increase of 1.9% in overall visits across the United States, while average visits per venue stayed relatively stable. During that same period, the chain underperformed its nationwide benchmark in California, Texas, and Washington in terms of both year-over-year overall visits and average visits per venue. The retailer still performed well in these states, as, overall, Costco visits grew in Washington and Texas and remained relatively stable in California. However, the data could suggest that Costco may be starting to reach saturation in its three largest markets. At the same time, the foot traffic metrics also show that Costco can grow in already strong markets while seeing only a slight dip in average visits per venue. As such, demand in those states may be strong enough to support a larger store fleet with minimal cannibalization of existing stores.
Across the company’s next three largest markets – Florida, Illinois and New Jersey – Costco outperformed its nationwide benchmark. In New Jersey and Illinois, where the chain does not seem to have opened new clubs recently, January to August 2023 visits, and average visits per venue, increased by 6% and 4.9%, respectively, relative to the 2022 period, Petrack pointed out. So Costco could have even more room for expansion in those markets.
Costco emerged as a back-to-school powerhouse this year, and comparing 2023 and 2022 visitor behavior further showcased the company’s growing clout in the season, Petrack added. During the first half of 2023, Costco visitors followed wider industry patterns as they returned to mission-driven shopping behavior, with consolidating shopping trips indicated by a drop in visits alongside an increase in dwell time. So between January and June 2023, the median length of a club visit increased relative to the same period in 2022, while the share of returning visitors, or shoppers who visited Costco twice or more in a two-month period, slipped. But during July and August 2023, the share of returning visitors actually increased relative to 2022, advancing from 52.9% to 54.1%, while the median dwell time remained constant at 37 minutes, the longest median time for the year. So, it seems as if Costco shoppers were willing to ditch their thrifty habits and visit their local warehouse as many times as, and for however long, it took to find the perfect backpack or other back-to-school need, Petrack concluded.
