Costco is one of the most talked about companies in the world of retail. The store’s name is often uttered in connection to mega deals or exciting new items being launched. These subtle in-store changes and rapid inventory turnover are a major part of Costco’s business model—they keep members happy and always hungry for more.
But the warehouse’s innovation runs much deeper than surface-level product swaps. Costco is also constantly working behind the scenes to add to its already massive list of services and make its entire shopping experience better, whether in-store or online. And, at the end of the day, larger shifts like these are what gets news outlets, investors, retail experts, and even competitors talking about the wholesale club as well.
Speaking of major changes, just this year alone, Costco unveiled new advancements by the pallet-load. Within the category of health and wellness, the warehouse expanded into telehealth to offer $29 primary care visits. In addition, a virtual try-on tool was added to Costco Optical online. Updates to the app were also a major focus. Not to mention, the big box chain rolled out fresh new carts which are said to “ride like a dream” and feature a larger basket.
With this year drawing to a close, plans for 2024 are well underway. In Costco’s latest earnings call on December 14, Chief Financial Officer Richard Galanti detailed a few developments the company is particularly eager to share. So, without further ado, here are the top changes you can expect to see at the warehouse over the next twelve months. Cheers to a new year and to a new, elevated version of Costco!
A Massive Amount of Store Openings
The construction never stops with Costco. As is the case in most years, 2024 will bring another round of ribbon cutting both nationally and beyond. Galanti noted on the call that the number of new store openings will reach a whopping 31 in the 2024 fiscal year, plus two warehouses will be relocated. This is a big step up from the 23 openings in 2023 and will significantly add to the company’s army of stores which is already creeping towards 900 worldwide.
Members in the U.S. can rejoice knowing that 24 of these new builds are headed their way. China will also welcome its sixth store this January, and other countries are on the docket, too.
Plus, a New Store Concept
There’s also been word that one of these new locations could be unlike any other Costco we’ve seen before. The company has proposed plans to build a mega-warehouse in Fresno, Calif., which would combine standard shopping and online order fulfillment all under one roof.
To make room for both, the building would stand at over 241,000 square feet. Compared to the company’s normal warehouse size of 146,000 square feet, this would be an absolute behemoth. The plans also outline a cross-docking logistics hub for the building, a drive-thru car wash, a gas station with 32 fuel pumps, and close to 900 parking stalls.
More App Improvements
Historically, Costco has not been at the forefront of technology. But over the past year, the big box retailer has continued to step up its game and has made improving its app and online experience a priority. After fixing various bugs and adding features like a digital membership card and a shopping list tool to its mobile application, downloads increased by about 10% during this past quarter which ended on Nov. 26. This boost brought total Costco app downloads to 30.5 million.
But members are still waiting on features like barcode scanning and online inventory lookup, which competitors like Walmart and Sam’s Club already offer and which Costo executives have been promising since last January. Hopefully, 2024 is the year when these convenient tools start to take shape.
During the earnings call, Galanti noted that when it came to e-commerce and the app the “first order of business was fixing the foundation.” But, he also commented that “targeting and then personalization” would also be more of a focus going forward.
A Membership Price Hike
If we’ve said it once, we’ve said it a million times. Members should get ready for a membership price increase sometime soon. In the past, Costco followed a typical cadence of hiking up prices once every five to six years. And, it hasn’t done so since June 2017. When asked about it on the earnings call, Galanti neither confirmed nor denied an upcoming price increase. But, he did go into some detail about that decision-making process.
“If you ask the question, what are the variables we would look at, we would want to look at strong renewal rates, strong new signups, strong loyalty, and we have all that,” Galanti explained. “So, I think it’s– the question is we–we haven’t needed to do it. We like providing extreme value. Certainly, while we’ve gone a little longer than the average increase, we feel we certainly have driven more value to the membership.
So, you know, I’ll use my standby answer, my pat answer, it’s a question of when, not if. But at this juncture, we feel pretty good about what we’re doing.”
A Change In Leadership
It was announced in October that the role of Costco Chief Executive Officer (CEO) will change hands effective January 1, 2024. Current CEO Craig Jelinek will step down and Ron Vachris, current Costco President and Chief Operating Officer, will take over on that date.
A press release about the change noted Vachris’ impressive 40-year employment at the company, where he started as a forklift driver and worked his way through many other sectors of the business. Jelinek stated his full confidence in his abilities to take over, and Galanti additionally assured during the earnings call that the handover “really is a seamless transition” and Costco would be “staying the course” in the meantime.
Food Court Swaps
Modifications at Costco’s iconic food court are always a hot topic of conversation. For example, just recently, customers were up in arms over a seating arrangement change. Apparently, at some warehouses, tables and chairs at the food court have been replaced with standing tables only–which many members argue are not convenient for all customers, especially children.
And the chain is sure to make more changes to the food court over the next 12 months. Specifically, one rumor states that the beloved churro may be axed from the menu very soon. In a Reddit post, a user shared that her brother, a Costco employee, heard the sweet treat would be pulled and replaced with cookies instead. Other commenters fessed up that they had heard the same news, but nothing has been confirmed by the retailer.
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