Costco Sees Sales Cool From October to November

Costco’s stock fell Thursday (Dec. 1) after the company reported slowing sales between October and November.

The bulk discount retailer said sales for the four weeks ending Nov. 27 — including Black Friday — were up 5.7% from last year to $19.2 billion. That’s slower than the 7.7% increase the company recorded in October and the 10.1% increase it saw in September.

Meanwhile, the report showed the retailer’s eCommerce sales continuing to fall, down 10.1% for the month, and 4.4% for the last 13 weeks.

The slowing sales at Costco, one of the country’s biggest low-priced retailers, were especially noticeable since so many of its discount-oriented peers are benefitting from the current rise in consumer demand for value.

Speaking with PYMNTS last month, Barbara Connors, vice president of commercial insights at 84.51°, the marketing subsidiary of grocery giant Kroger, discussed how increasing cost-sensitivity can impact the embrace of eCommerce channels.

“We know that very price-sensitive customers are those that have lower engagement with eCommerce and are lower on the adoption curve, and those are the customers that are most likely to go into a store,” Connors said. “And one of the reasons is because they are looking for sales, deals and coupons, and it is easier for them to do that in-store than online.”

Meanwhile, overall consumer confidence remains dampened by inflation and rising interest rates. A greater portion of holiday shoppers made their purchases on Black Friday this year than ever before, seeing the savings retailers offer as a necessity in these trying times.

“[T]he economy has lost momentum as the year winds down,” Lynn Franco, senior director of economic indicators at the Conference Board, said in a statement. “Consumers’ expectations regarding the short-term outlook remained gloomy. … The combination of inflation and interest rate hikes will continue to pose challenges to confidence and economic growth into early 2023.”

Costco has seen its low-priced corner of the market grow increasingly competitive this year, as rampant inflation and economic uncertainty have led both budget-conscious consumers and overstocked retail rivals to explore its space.

“Whether it is increasingly diverse and nimble grocery stores trying to outhustle them, big-box stores and eCommerce players promising faster and more perks, traditional mass-market brands getting more aggressive with promotions or a well-armed attack from dollar stores and discounters, Costco’s model, mission and value proposition are under fire,” PYMNTS wrote in September.

The company is scheduled to release its quarterly earnings report Dec. 8.

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