Sam's Club announced this week it was closing 63 locations, or nearly 10% of it's stores. Costco, meanwhile, saw its sales, profits, comps, and membership income all increase in the most recent quarter.
Why is one of these retailers winning, and the other one losing? 3 simple reasons:
- The Merchandise - in the age of Amazon, where you can get anything you want online, it turns out clever merchandising still matters. Costco is the anti-Amazon, focusing on having fewer SKU's rather than more. The importance of having the RIGHT items is thus incredibly important, and more often than not, Costco buyers get it right. Costco's emphasis on perishable and consumable items also keeps customers returning.
- Omnichannel Focus - Costco's Internet sales grew by 42% in the most recent quarter, compared to last year. The company is also taking advantage of its store base to offer same day delivery of perishable items. In order to get special deals on the costco.com, customers have to enter their membership number, and membership is where Costco makes its profit margin.
- Fun - It's often (but not always) fun to shop at Costco. I love going on a weekday every month or so, in order to see what new items they have. Even if you're just going to buy food or toilet paper or diapers, chances are you will see something else you like for a price that seems reasonable. Because that item might not be available next month, you snatch it up.