This episode of Retaili$tic delves into the competition between the two market leaders in warehouse club retailing: Costco and Sam's Club. Georgina Smith, Head of Editorial, presents highlights from Coresight Research's new "Head-to-Head" report, offering insights into the two companies' market positioning, strategies and approach to tech innovation. The discussion also covers the impact of consumer demographics on the warehouse clubs' business models. Listen now to uncover how Costco and Sam's Club are adapting to changing consumer expectations and expanding their presence in the brick-and-mortar retail space.
Takeaways
Chapters
00:00 This Week in Research: New Reports and Data
03:04 Costco vs. Sam's Club: Market Overview
05:53 Strategies and Innovations: Costco's Edge
08:56 Demographics and Consumer Behavior
09:49 Future Outlook: E-Commerce and Technology
Dive into our data-driven insights in more detail in the full report: Head-to-Head in US Warehouse Club Retailing: Costco vs. Sam’s Club
Philip: Welcome to Retaili$tic, the official podcast of Coresight Research for April 29th, 2025. This week, we are taking a closer look at the battle of the giants in the warehouse club space. Georgina Smith, our head of editorial, is here to preview some of the research we're publishing this week and share insights from the head-to-head report on Costco vs. Sam's Club. Hi Georgina!
Georgina: Hi, Philip. Some of our listeners may have just attended the NACDS annual meeting in Florida, as the Coresight research team has. At the conference, hosted by the National Association of Chained Drug Stores, our CEO and founder, Deborah Weinswig, presented in a session as part of the Meet the Industry program. She explored how cutting edge technologies such as AI, automation, and predictive analytics are redefining collaboration between retailers and suppliers.
Drawing on her deep expertise in retail innovation, Debra shared strategies to harness these tools to drive efficiency, agility and long-term growth. We will release the presentation deck online for our premium subscribers. Aligning with NACDS, Debra was also published in Chain Drug Review this week with an article on three technologies that are transforming the drugstore and pharmacy landscape as consumer expectations rise and healthcare becomes increasingly digital. Advanced technologies are not only streamlining operations but also enhancing the customer and patient experience.
In the article, which is also available on Coresight.com, you can discover how prescription fulfillment technologies, AI care analytics, and digital customer engagement tools enable drugstores and pharmacies to gain a competitive edge by cutting costs, boosting efficiency, and delivering personalized experiences. I also just wanted to highlight that Coresight Research hosted an exclusive executive dinner at NACDS, sponsored by unified planning solutions provider, RELEX. Thank you to all those who joined us for a truly enjoyable and thought-leading event. Please check out our future events and contact us to make sure you don't miss out.
Among our new research this week, we will spotlight US Warehouse Club Retailing, examining the performance and strategies of Costco and Sam's Club. Our analysis pits the two market leaders head to head and offers insights on shopper demographics, store expansion plans, technology innovation and more.
Also, our coverage of first quarter 2025 earnings will begin this week. Our earnings insights reports feature management commentary from Coresight 100 retailers on their recent performance and future outlooks, with highlights on the impacts of inflation, tariffs and interest rates. I encourage you to download our earnings calendar to keep on top of retailers releases and look out for our comprehensive coverage, which will span 15 retail sectors over the next six weeks.
As usual, our weekly data-driven research will offer updates on how US consumer sentiment is tracking amid tariff developments, as well as detailing changes in major retailers brick and mortar footprints in the UK and the US. Our upcoming monthly installment of the US Store Tracker Extra Series will also detail US retailers store closure and opening announcements from April 2025 and the square footage impacts of these developments.
Philip: Thanks Georgina. You mentioned the Costco versus Sam's Club report. Let's take a deeper dive on that. How do Costco and Sam’s Club stack up in the US market today?
Georgina: Costco dominates the US warehouse club sector with $184 billion in revenue in its latest fiscal year, roughly double Sam’s Club’s revenue. They have a similar store count—Costco at 611, Sam’s Club at around 600—but Costco’s scale and efficiency support its lead. Both operate on a membership-based, high-volume, low-price model, offering bulk goods with minimal overhead. Costco’s focus on limited SKUs and private-label strength boosts its edge, while Sam’s Club leverages Walmart’s infrastructure to compete.
Philip: What’s behind Costco’s revenue lead?
Georgina: Costco’s near-11% compound annual growth rate in US sales between 2019 and 2024, slightly above Sam’s Club’s 9.7%, comes from strong comparable sales growth and new warehouse openings.
Costco’s efficiency, driven by high inventory turnover and high-margin membership fees, enables the retailer to keep prices low while scaling profits.
Philip: How does Sam’s Club’s strategy differ?
Georgina: Sam’s Club focuses on omnichannel and tech to close the gap, targeting younger, less affluent shoppers. Its sales growth is driven by unit volume growth in grocery and health categories, supported by Walmart’s supply chain. Innovations like Scan & Go, which is used by 30% of customers, and AI-powered seamless-exit tech appeal to convenience-driven millennials. Sam’s Club is also expanding e-commerce with express delivery and free shipping for Plus members, aiming to provide a seamless shopping experience that Costco’s more traditional model doesn’t prioritize.
Philip: Why do shopper demographics matter in this model?
Georgina: Demographics are critical because warehouse clubs rely on bulk purchases. Costco’s shoppers, with higher household incomes, can afford to buy in large quantities. Sam’s Club’s younger, less affluent base aligns with its tech investments but limits bulk-buying power. In tough economic times, Costco’s wealthier customers are better insulated, while Sam’s Club’s base faces tighter budgets, which impacts sales.
Philip: Costco draws more shoppers—why?
Georgina: Recent quarterly surveys from Coresight Research reveal that consistently around on in three US consumers buy from Costco in any given three-month period, versus just under one-quarter for Sam’s Club.
Costco’s brand loyalty is unmatched, built on a perception of unbeatable value, quality private-label products like Kirkland, and a treasure-hunt shopping experience. Its no-frills stores and curated SKUs resonate with shoppers seeking efficiency. Sam’s Club competes well but lacks Costco’s cult-like following, partly because its broader Walmart overlap dilutes its unique appeal.
Philip: Is Sam’s Club’s tech resonating with younger shoppers?
Georgina: Absolutely. Sam’s Club’s Scan & Go, seamless-exit tech, and express delivery are hitting the mark with younger, tech-savvy shoppers who value convenience. About 50% of the retailer’s customers are digitally engaged, and its AI-driven exit tech is now live in all US stores, streamlining the shopping experience. Costco’s traditional model retains loyal, older shoppers, but Sam’s Club’s tech could give the company an edge with millennials over time, especially as omnichannel becomes table stakes.
Philip: Will Costco need to ramp up omnichannel?
Georgina: Omnichannel is becoming essential as shoppers expect seamless experiences. The ‘Costco Next’ marketplace and Costco’s delivery partnerships are steps forward, but the company’s reluctance to expand its curbside services due to costs could be limiting. The company will likely invest more—retail media is a key growth area, for example—but won’t abandon its efficient, in-store model. Sam’s Club’s heavier omnichannel bet gives it an edge with flexibility, but Costco’s scale keeps it ahead.
Philip: Why the push for new stores now?
Georgina: Both companies see untapped potential in the US. On average, Costco has added 16 stores annually in the US since 2021 and plans to open 25-30 new warehouses each year over the next five years, half of those in the US. Sam’s Club, which has operated around 600 stores since 2021, now targets 15 new clubs per year. In-store traffic fuels impulse buys and membership renewal. Despite e-commerce growth, the warehouse club model thrives on brick-and-mortar scale.
Philip: How do regional strongholds shape their strategies?
Georgina: Costco’s California dominance—the state drives 27% of the company’s US sales—stems from its 1993 Price Club merger, giving it a dense, high-volume network. California’s affluent market boosts the company’s metrics. Sam’s Club is strong in Texas, leveraging Walmart’s regional presence for supply chain efficiencies. Both companies tailor their strategies to these hubs: Costco doubles down on large warehouses, while Sam’s Club integrates with Walmart’s endless-aisle model to differentiate from Supercenters.
Philip: Who’s better positioned in a tough economy?
Georgina: Costco’s affluent shoppers give it resilience. The company’s ability to absorb higher costs and maintain bulk purchases supports steady growth, even in downturns. Sam’s Club’s lower- and mid-income base faces macro headwinds, limiting their bulk-buying power. However, Sam’s Club’s tech and omnichannel investments could attract deal-seekers, and Walmart’s infrastructure helps manage costs. Costco’s lead is secure, but Sam’s Club is more nimble.
Philip: Can Sam’s Club close the gap with Walmart’s help?
Georgina: Walmart’s supply chain and tech resources are a major boost. Merged operations improve efficiency, and innovations like express delivery strengthen Sam’s Club’s appeal. But Costco’s 184 billion-dollar revenue, loyal base, and private-label dominance create a high bar. Sam’s Club can narrow the gap with younger shoppers and e-commerce, but overtaking Costco’s scale and brand equity will take years, if it’s even possible.
Philip: Who’ll innovate faster in five years?
Georgina: We’d bet on Sam’s Club. Its tech momentum—with Scan & Go, AI exits and robots—and Walmart’s backing position the company to adapt quickly to digital trends. Costco will innovate, especially in retail media, but its focus on low costs and traditional strength slows its pace. Sam’s Club’s younger base and omnichannel push make the company the faster mover, though Costco’s steady execution keeps it dominant.
Philip: Any final thoughts for retailers or shoppers?
Georgina: Watch Costco’s tech investments, like retail media, and Sam’s Club’s expansion into new clubs and e-commerce. Value will remain king as budgets tighten, so both will lean into private labels and efficiency. Shoppers should expect more digital options from Sam’s Club and steady deals from Costco. Retailers in this space need omnichannel competence to compete, but Costco’s model proves simplicity still wins.
Philip: Georgina Smith, thank you for this deep dive.
Georgina: Thanks for having me.
Philip: And thank you for joining us this week on Retaili$tic. If you find value in our weekly visits, please invite your friends to join us and give us a review. You can also follow CoreSight research on LinkedIn for updates and sign up on coresight.com to receive a free, daily email with insights from our global staff of analysts. Have a wonderful day and we'll see you next week.