Costco Clientele Shifts Towards More Home Cooking

CEO of warehouse giant Costco, Roland Vachris, reported intriguing shopping trends on Thursday's earnings call. Notably, the retailer has observed its higher-earning clientele cooking at home more frequently. Customers are choosing both ends of the price spectrum, purchasing premium ingredients such as Wagyu beef and simultaneously, affordable alternatives. "High-quality premium cuts are selling well, but we're also noticing a trend towards those lower price per pound items," said Vachris. In the U.S., Costco's same-store sales rose by 5.2% in comparison to last year. Executives highlighted that produce and meats performed notably well as members cooked at home more. The company's CFO, Gary Millerchip, pointed out that customers are willing to spend more when they identify value and fresh product inclusions. To cater to this consumer preference, Costco continues to introduce new private-label products and reduce prices on certain existing items. Private-label products usually have lower prices than competitor offerings, a strategy leveraged by many retailers. Shoppers have been investing more in Costco's own Kirkland Signature brand, which now represents around one-third of Costco's U.S. food sales, according to executives. "The Kirkland Signature brand is growing at a faster pace than the rest of the business," said Vachris. Costco reported a first-quarter profit of $1.8 billion in its fiscal year, an increase from $1.59 billion in the previous year. This is the first earnings report revealing a rise in membership fees that were put in place in September.