retail news in context, analysis with attitude

The Wall Street Journal reports this morning that "lackluster sales growth, slowing foot traffic and a late-to-the-game push into e-commerce have hurt results" at Costco, and that these days, competition against Amazon has to be top of mind.

"The online behemoth’s annual revenue is expected to surpass Costco’s for the first time this year," the writes. "By comparison, Amazon had less than half of Costco’s annual revenue six years ago.

"Over the past five years, Costco’s shares have trailed Amazon’s, while outperforming Wal-Mart. The contrast has only grown starker over the past 18 months as Costco’s stock has treaded water while Amazon’s has more than doubled."

The Journal continues: "Costco’s competitive edge lies in limited product selection, loyal customers and fee income. Its roughly 81 million card holders spent around $2.5 billion in membership fees in fiscal 2015, comprising the bulk of Costco’s $3.6 billion in operating income. But Costco is arguably paying more now than ever for that growth. Capital expenditures rose to $2.4 billion in fiscal 2015, more than double their level six years earlier. Meanwhile, same-store sales growth has slowed for four years in a row."
KC's View:
I wrote this the other day in a slightly different context - that when I thought about it, I realized the degree to which I have shifted Costco spending to Amazon. It is just easier. No lines. No significant price differences.