Executive Briefings

Will Millennials Kill Costco?

There’s a Costco to one side of Gwendolyn Hammer’s house and a Sam’s Club to the other. But when the 28-year-old needs 12-packs of paper towels, or 36 rolls of toilet paper, she heads online instead.

Once a month she uses her smartphone to place a bulk order on Boxed.com, a website founded five years ago as a millennial-friendly alternative to warehouse wholesalers. There is no membership fee, and most orders arrive within two days. Other times, she stocks up using Amazon Prime.

“I’ve never had a Costco membership, even though I knew shopping there would likely end up saving me money,” said Hammer, who lives in Utah Valley, Utah, and grew up shopping at Costco with her parents. “I do like not having to haul my kids to the store.”

Warehouse clubs such as Costco, Sam’s Club and BJ’s Wholesale Club have for decades been an American staple: a place where families can stock up on bulk items, try free samples and spend the better part of a weekend morning meandering through aisles filled with 26-packs of canned salmon and king-size mattresses. But as more of Americans’ buying shifts online, some retail analysts say warehouse clubs may largely be left behind.

“The core club customer is older: It’s generally someone with a family and a house,” said Sucharita Mulpuru, an analyst at the research firm Forrester. “Costco has been one of the least digitally forward companies out there. This segment has had its head in the sand when it comes to competing with Amazon.”

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Once a month she uses her smartphone to place a bulk order on Boxed.com, a website founded five years ago as a millennial-friendly alternative to warehouse wholesalers. There is no membership fee, and most orders arrive within two days. Other times, she stocks up using Amazon Prime.

“I’ve never had a Costco membership, even though I knew shopping there would likely end up saving me money,” said Hammer, who lives in Utah Valley, Utah, and grew up shopping at Costco with her parents. “I do like not having to haul my kids to the store.”

Warehouse clubs such as Costco, Sam’s Club and BJ’s Wholesale Club have for decades been an American staple: a place where families can stock up on bulk items, try free samples and spend the better part of a weekend morning meandering through aisles filled with 26-packs of canned salmon and king-size mattresses. But as more of Americans’ buying shifts online, some retail analysts say warehouse clubs may largely be left behind.

“The core club customer is older: It’s generally someone with a family and a house,” said Sucharita Mulpuru, an analyst at the research firm Forrester. “Costco has been one of the least digitally forward companies out there. This segment has had its head in the sand when it comes to competing with Amazon.”

Read Full Article