retail news in context, analysis with attitude

The Washington Post reports that when Costco announced two new delivery options last week - one in-house, of nonperishable food, and the other an expanded partnership with Instacart - it made the company more competitive with the options offered by rivals Amazon and Walmart.

So what happened? “Shares of the company’s stock tumbled 6 percent Friday following the announcement,” the Post writes.

The reason? According to the Post, “some analysts worried that Costco — which has been successful at getting people to make impulse purchases at stores — may lose its edge if fewer shoppers are roaming its aisles.”
KC's View:
The thing that Costco has proven over the years is that it is relatively unconcerned with the vagaries of analysts’ rationale. The company has long acted upon the firm conviction that if it takes care of its employees and customers, Wall Street will take care of itself.

There is a legitimate argument that perhaps Costco has waited too long to get into the game, but I wouldn’t be worried about the whole impulse issue. I’ve long argued that Amazon is a strong engine for impulse purchases … not because I may happen to wander down a random aisle, but because they track my behavior so closely that they know what offers to which I am likely to respond.

Impulses can be created via a lot of mechanisms. Costco is smart enough to know this, and respond appropriately.