Sales At Costco Drop From October To November
(CTN News) – The stock of Costco dropped Thursday (Dec. 1) following reports that sales at the company had slowed between October and November.
In the four weeks ending Nov. 27, sales at this bulk discount retailer were up 5.7% from last year to $19.2 billion – which includes Black Friday – as compared to the same period last year.
In September, the company’s revenue increased by 10.1%, which was slower than the 7.7% increase it saw in October, or the 7.7% increase seen in October.
In the meantime, the report showed that eCommerce sales for the retailer continue to decline. These sales are down 10.1% for the month, and down 4.4% in the last 13 weeks, according to the report.
Costco, one of the country’s largest low-priced retailers, has seen its sales slow down in recent months, which is particularly significant since so many of its discount-oriented competitors have been taking advantage of the current rise in consumer demand for value-based products.
PYMNTS spoke with Barbara Connors, vice president of commercial insights at 84.51°, Kroger’s marketing subsidiary, last month about how increasing cost-sensitivity is affecting the adoption of eCommerce channels as a result of the rise in cost-sensitive consumers.
There is no doubt that those customers who are highly price sensitive are likely to have lower engagement with eCommerce, as well as a lower adoption curve.
This is because they are more inclined to shop in a store. According to Connors, those customers are more likely to spend their money in a store. In addition, they are searching for discounts, deals, and coupons in-store, so it is easier for them to do that when they are in-store rather than online, and this is one of the reasons for this.”
However, inflation and rising interest rates continue to dampen consumer confidence overall as a result of rising inflation.
The percentage of holiday shoppers buying their gifts on Black Friday this year was higher than ever before, with many shoppers seeing the savings that retailers are offering as a necessity in this difficult economic climate.
As the year winds down, Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement that the economy has lost momentum as the year progresses.
The expectations of consumers regarding the short-term outlook for the economy remain gloomy in the short term. As the combination of inflation and interest rate hikes persists into early 2023, confidence and economic growth will continue to face challenges as a result of these developments.
Since rampant inflation and economic uncertainty have led both budget-conscious consumers and overstocked retail rivals to venture into Costco’s space this year, despite the firm’s low-priced corner of the market, Costco’s low-priced corner of the market has grown increasingly competitive.
In the same vein, PYMNTS wrote in September, “Whether it is the increasingly diverse and nimble grocery stores trying to outhustle them, big-box stores and eCommerce players offering faster and more perks, traditional mass-market brands becoming aggressively promotional, or dollar stores and discounters swarming at Costco’s model, mission, and value proposition, Costco’s model, mission, and value proposition have come under fire.”
A quarterly earnings report is scheduled to be released by the company on Dec. 8.
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