Retail

Despite Slipping Sales, Costco Continues To Crush Sam’s

Costco has been the undisputed leader in its category more or less since the inception of its category, though these days that dominance is fading some as same-store sales growth has started slipping in the last few months.

The good — or at least equalizing — news is that Costco isn’t losing customers to its rivals at Sam’s Club, which is clearly not picking up the missing customer base (with its own same-store sales growing at less than 1 percent), or Sam’s parent, Walmart, which has seen its first same-store sales actually decline for the first time in a long time.

Costco’s troubles are relatively new. As of November, Costco was still seeing 6 percent gain in comp sales in the U.S. (excepting the unusually low price of gasoline). Particularly strong was Thanksgiving weekend for both grocery and consumer electronics. However, December didn’t bring a rush of shoppers — and instead saw comp sales slow by 4 percent in December, with domestic comp sales up only 1 percent in January. So far that is being written off as a blip brought on by bad weather and weird Super Bowl placement.

Costco’s shaky performance is, of course, better than the bludgeoning Sam’s took in 2015 when total sales were down 0.1 percent and comp sales were down .5 percent for the holiday quarter. The big key to Sam’s loss, according to experts, was food price deflation, which led to a comp sales decline in fresh and grocery foods during Q4.

Sam’s plan going forward lies in focusing on higher income consumers with higher-end merchandise. Costco, despite the relative softness in recent results, is not making any major changes, as its problems are currently being categorized as issues endemic to the whole warehouse club segment. It is widely anticipated it can ride this out, and perhaps consolidate some power because of its size and market share advantage.

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