Costco Is Leading The US Grocery Market With A Bucket of Mac-And-Cheese | USA
Costco Is Leading The US Grocery Market With A Bucket of Mac-And-Cheese

Costco has been hitting the headlines early in 2019 for an unusual reason. Their website carries a $90 bucket of mac-and-cheese that weighs 27 pounds and has a 20-year shelf life. Clearly it might be useful for students who want to eat the same food all semester or people stocking their nuclear bunker and preparing for when a large asteroid hits the earth.

Personally I’d be a little concerned about just how much preservative is needed to keep that cheese fresh for two decades, but the product is sold out – you simply can’t buy this product any longer anywhere in the US. Going viral clearly helps with sales of mac-and-cheese and it has been fun to watch the bucket of pasta go viral, but it’s not the only good news that Costco has been enjoying recently.

Traffic on their website increased by 5.6% in December 2018 just as many other retailers are struggling to maintain the traffic they already have. Sales increased year-on-year by 7.8% from $14.3bn to $15.4bn and in the last 18-weeks to January 6, 2019, net sales increased by 9.5%.

Something great is happening at Costco and it’s not just the mac-and-cheese.

Forbes magazine speculated that some of these results might be because Toys R Us is no longer with us. Customers who would have bought from Toys R Us have now been spread throughout the mass merchant retailers and are therefore looking to brands like Costco, Walmart, and Target for toys, but I don’t think that this alone can explain such strong results.

The retail data analysis firm Dunnhumby just published data on America’s favorite grocery stores. The data ranked stores by measures such as price, quality, omnichannel offer (app or website), operations, discounts, and speed of service. Taken as a whole, these measures give a good approximation of the customer experience at each retail brand.

Trader Joe’s came out top, largely for their keep-it-simple approach to in-store shopping, but Costco came in second – in front of Amazon in third place. I think that’s a major achievement because Dunnhumby has a reputation in the data science community  – this is a company that has spent 30 years analyzing customer loyalty systems so they are not just a marketing firm seeking publicity with a New Year survey of customers.

Costco may be hitting the viral headlines for that bucket of pasta right now, but their in-store and online customer numbers are up, sales are up, and their customer experience is being ranked higher than the company we usually use to define retail CX. I think it’s worth keeping a close eye on Costco in 2019 as some of their ideas around CX are going to define how American grocery stores operate in 2020, and beyond.


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