retail news in context, analysis with attitude

The Seattle Times reports on a new study from boutique research firm MoffettNathanson saying that “fifty-seven percent of Costco members also pay for Amazon Prime, up from 13 percent in 2013.”

The overlap “underscores the increasing cross-town competition between two of the world’s largest retailers,” the story says.

In addition, the Times writes, “For both Costco and Amazon, renewal intention was down from 2016 to 2017 for one key age group: millennials. The declines were small, and the vast majority of people 18 to 34 still told survey takers they plan to renew.

“But it was enough to catch the attention of the MoffettNathanson analysts. Costco, in particular, is under pressure to show how it is attracting younger members … The analysts offer a couple of potential explanations for the dip in millennial renewal rates: ‘Maybe millennials are just less loyal than their parents when it comes to retailers, or perhaps more of them joined on a limited trial basis (i.e. Living Social promotions). It’s a trend that we haven’t seen in our surveys before so worth watching, especially as the stickiness of membership is such a critical attribute of the model’.”
KC's View:
You can count my household as one that has both a Costco and a Prime membership, though it is fair to say that Prime has eroded a lot of our Costco spending.

While I tend to be skeptical of a lot of the suggestions for potential Amazon acquisitions, I do think that buying a membership club chain would be a fascinating fit that would be a 1+1=3 kind of deal.