Chloe Sorvino
Staff Writer at Forbes
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I’ve been distancing at my apartment in New York City, mainly ordering food from online restaurant distributors and different farm boxes until my neighborhood’s CSA starts in a few weeks, but if I had ventured out to where I grew up in suburban New Jersey, a classic off-highway Costco next to a HomeGoods and a Target would have probably been my first stop to stock up. I’ve been a fan ever since I was a kid let loose to search out all the samples, and I still have a guilty obsession with its pizza.
But it looks like many families have turned elsewhere. Monthly sales rose 12% in February as stockpiling started at the chain’s warehouses, but as it picked up at grocers like Kroger and Walmart into March, Costco reduced store hours, limited traffic coming in and also capped purchases of some nonessential items. Instacart orders picked up, but March sales were up a comparatively lower 9.6%.
The bigger shocker came earlier this month, when the publicly traded chain reported earnings, and disclosed that April was its first monthly sales drop since 2009. Most of the hit came from low gas prices, and without that, it accounts for a drop of just 0.5% for the past 12 months all together. But Placer.ai data shows foot traffic has been all over the place, and it has made me rethink a lot.
Maybe it was those early reports of fights breaking out. As any true Costco member knows, half the fun of a normal weekend visit is the long and often tense lines, and how taking a break from idling with the cart can turn into wandering through aisles and finding surprises like a value pack of mechanical toothbrush head replacements. But like the samples and the pizza, few of the joys of Costco seem to have a place in a coronavirus world.
Costco has proven itself to be a game-changing channel for hot brands like Health-Ade and Perfect Bar over the years, so where does that all stand now? I asked Jeremy Smith, the president at LaunchPad, who specializes in helping brands get distribution at Costco. “There’s no way to get into Costco right now at this point,” Smith told me. “But by mid-2021 we should be back to reestablishing the emerging brands. Consumers just don’t walk away.”
Pointing to the mortgage crisis and recession, when Costco outperformed most retailers, Smith says he is optimistic sales will improve at the chain long-term: “It’s a choppy environment. As long as people are not confident that they can walk into any retailer and not worry about infection, you’re going to have sales to the negative side, but at Costco the volume is so high that there’s potential even with fewer members walking into the buildings.”
Until next week! In the meantime, I’d love to hear more about new kinds of restaurant delivery models, what it’s like to develop a new food or drink right now, and quarantine-approved Memorial Day recipes. And, by the way, I’m now doing a weekly Live show on the Forbes Instagram account. Tune in on Wednesdays.
— Chloe Sorvino, Staff Writer, Forbes
