Costco is one of the most popular retailers in the country, but you need a membership fee to buy there. This can be a hassle for some people, and there are similar companies and alternatives out there. It is one of the best and largest retail chains in the world. But apart from this, every investor uses it as a benchmark for certain business traits, for instance, its ability to sell at high-profit margins.
It has a unique business model that offers its members wholesale prices, access to brand name products, and exclusive merchandise that other retailers don’t carry. While it is difficult to find the perfect store, given the variety, we do have some alternatives to Costco.
What is Costco Corporation?
Costco Wholesale Corporation is a multinational retail warehouse club. After Walmart and Amazon, it’s the world’s third-largest store in terms of income. The company has over 800 warehouses worldwide, primarily located in North America and Europe, with 75 distribution centres supplying Costco stores and employing an estimated 174,000 employees in the United States and Puerto Rico.
Costco’s business concept revolves around selling things in large numbers at low prices. This requires large amounts of working capital to purchase inventory and pay for its services for members, such as gas stations, pharmacies, and opticians. The average Costco warehouse carries about 2,400 stock keeping units (SKUs) compared to the 30,000 in a typical supermarket.
The company also operates an online store that offers thousands of additional items not found in most of its warehouses. Costco offers a variety of products at low prices, including electronics and appliances, furniture, clothing, jewellery, food, and more. The company also offers several services to its members, such as prescription drugs, optical and hearing services, and travel insurance, among other things.
Costco’s revenues totalled over $116 billion in 2016, with a net income of $4 billion. Costco employs more than 350,000 people worldwide and serves around 88 million members.
Top Costco Similar Companies
Costco is a warehousing club that offers discounted pricing on a huge range of goods to customers. Since its inception in 1976, the industry has become among the most well-known American merchants.
Costco operates on a business model of providing high-volume products at low prices to its members through a worldwide chain of warehouses. The company also maintains an online presence with a vibrant eCommerce platform.
Here are some of the top Costco competitors in 2023:
Target Corporation
Target Corporation, after Walmart, is the second-largest inexpensive company in the United States. The company operates 1,834 locations in the United States and 124 in Canada as of 2019.
George Dayton launched Target in 1962, with its initial location in Roseville, Minnesota. In 2000, Dayton’s heirs sold the company to Advance Publications for $1.5 billion and a seat on the board. The company announced plans to move its headquarters from downtown Minneapolis to a site near its campus in Brooklyn Park, Minnesota, by 2020. The St. Paul Port Authority approved a $4 million grant for infrastructure improvements around the site. In 2018, Target announced that it would be moving back to downtown Minneapolis in 2022.
Since then, the company has expanded through many mergers and acquisitions to become one of America’s largest corporations in terms of revenue while maintaining a “cheap chic” image based on designer labels and chic but affordable fashions.
Target is a multi-channel retailer with stores and e-commerce sites across North America and Canada. Its multi-channel strategy offers a wide range of products, including clothing, food, toys, and electronics, for home improvement needs at affordable prices.
Wal-Mart Stores, Inc.
The biggest Costco competitor is Wal-Mart Retailers. It is a flagship telecommunications firm based in the United States that operates a series of major discount stores and warehouse facilities, featuring Walmart in Canada. Sam Walton created the corporation in 1962, which was organized on October 31, 1969, and listed on the New York Stock Market in 1972. Bentonville, Arkansas, is the company’s headquarters.
The organization is responsible for Walmart in the Canada and U.s, and its giant brand is branded Supercenters. It also has Wal-Mart Supercenters and, Neighborhood Market grocery stores; Sam’s Club warehouse membership clubs.
The corporation operates megastores, outlet stores, and supesupermarkets28 countries beyond the United States, with completely enterprises in South Africa, Argentina, Canada, and China. It also has a joint venture with Sainsbury’s supermarkets to operate Sainsbury’s Fresh & Easy stores using the same model as its American Sam’s Club stores.
In 2008 Wal-Mart became the largest private employer in Mexico after purchasing 51% of Cifra’s shares for $955 million from Carlos Slim Helu. As of January 31, 2015, Walmart employs 2.2 million people worldwide. In 2014 it generated $485 billion in revenue.
S&P Global Inc.
S&P Global Inc., the world’s leading provider of financial market intelligence, is a member of the S&P 500 index and the S&P Global 1200. Which includes over 1,300 companies from 47 countries that have a market value of $2 trillion.
It is a not-for-profit membership association whose mission is to help investors succeed by providing transparent, independent and comprehensive standards for evaluating credit ratings, research, and investment tools for the global capital and commodity markets. Since 1923 S&P Global has set the standard for independent credit ratings that shape global capital markets.
S&P Global offers in-depth coverage of more than 90% of the investable debt securities issued in the U.S., with greater depth in some sectors such as energy and utilities. We also cover approximately 95% of all corporate bonds outstanding globally. S&P Global has a market cap of $41 billion vs Costco’s $102 billion market cap.
S&P Global is a $15 billion corporation with the official code SPGI on the York Stock Exchange ( NYSE.) Since 1999, the corporation has been publicly listed.
Kroger Co.
Kroger is the main Costco competitor in the United States. It operates a chain of supermarkets and convenience stores, and several other retail chains in addition to its flagship supermarket chain. Bernard Kroger began the enterprise in 1883 with a small grocery shop in Cincinnati, Ohio. In 2015, Kroger’s total sales were $115 billion. The company currently has more than 2,600 supermarkets under various names across 35 states and the District of Columbia.
Costco and Kroger are the two main competitors of each other. Both organizations are supermarket dealers with over 40 years of experience. They both provide clients with reasonably priced products. On the Fortune global 500 lists of U.S. businesses by income, the organization is ranked 30th. In 2018, it was named America’s favourite grocery store in Consumer Reports’ annual survey of more than 50,000 readers.
Amazon.com
Amazon is the biggest online retailer globally, with over $60 billion in revenues in 2018. Jeff Bezos established the business in 1994, and it has been gradually developing since then. Amazon is also a diversified company with many products, including groceries, electronics, and clothing.
Prime Day is among Amazon’s busiest shopping occasions of the year. It’s only available to Amazon Prime members and offers limited-time discounts on thousands of items across all product categories.
Amazon has several different services purchased separately or as part of an annual membership called Amazon Prime. Some of these include free two-day shipping on many items sold by Amazon, access to its digital video library, and more.
Amazon’s business model is based on offering consumers convenience, selection, and great prices. The company also offers various services and products such as Amazon Web Services (AWS), Kindle devices, and Kindle content. In 2017, Amazon had $177 billion in revenue worldwide, with 93% coming from web services like AWS.
It’s a leading online retailer that sells a range of products at reasonable costs. Jeff Bezos established the business in 1994, and it is situated in Seattle, Washington. Amazon has approximately 100 million daily active users, making it one of the global highest online merchants. The company continues to grow year after year, increasing its market share in North America and Europe.
CVS Health Corporation (CVS)
The major Costco similar compcompanyCVS Health Corporation. CVS Health Corporation is a retail pharmacy business which operates primarily under the CVS Health brand. The Company offers a range of products and services through about 7,800 drugstores with approximately 9,800 pharmacy counters throughout the United States and Puerto Rico. Its operating segments include Retail Pharmacy Group (RPG) and Rx Services Group (RSG).
It has a market capitalization of $77.4 billion and operates in the Drug store – Chain industry. The company has $249.5 billion in revenue over the last 12 months but has lost $0.87 per share in its most recent quarterly report. The firm’s earnings have been increasing at a steady rate of 33% over the past five years, with earnings growth averaging 17% per year since 2011. The company is profitable and pays dividends, with an annual dividend of $2.00 per share and a payout ratio of 64%.
The stock price of CVS is currently trading around $72 per share, down 1% from its 52-week high of $73 per share but up 9% from its 52-week low of $64 per share.
Costco has partnered with CVS Health Corporation, which operates the pharmacy benefit manager Caremark, to offer its members discounts on certain prescription medications.
CVS Health Corporation was founded in 1968 and operated more than 9,700 retail pharmacies across the United States. The company also owns the Caremark PBM and Target-owned pharmacy, Target Pharmacy.
TJX Companies Inc (TJX)
TJX Companies is the parent company of T.J.Maxx, Marshalls, HomeGoods, and Sierra Trading Post. The company was founded in Massachusetts in 1956 by Joseph P. Mancuso and his wife, Eileen, who opened a small discount clothing store in their hometown of Framingham, MA, called T.J.Maxx. By 1976, the company had expanded to include six stores under the T.J.Maxx name and two stores under the Bargain Barn name in Massachusetts and New Hampshire.
In 1978, TJX Companies went public when it issued its first common stock offering at $10 per share; two years later, it paid off its initial debt of $4 million with its first profits of $1 million from sales of $23 million (more than double what they were just three years earlier). By 1982 sales had grown to $100 million, and the company had expanded into Rhode Island and Connecticut with four new stores under the T.J.Maxx name alone.
In 1989 there were 27 TJX stores in four states with sales topping $500 million per year; by 1990, they had opened their first two discount outlets outside New England: one in the Philadelphia area and another in Chicago. The company’s revenue in 2015 was $22 billion, a 10 per cent increase from 2014. In August 2016, TJX purchased Sierra Trading Post for $200 million.
Ross Stores, Inc (ROST)
Ross Stores is one of the stores similar to Costco which operates in the U.S. It has been in business for over 50 years and is based in California. Ross Stores specializes in discount apparel, shoes, and accessories for women, men, and kids.
Ross Stores, Inc operates as a discount retailer of apparel and home fashions in the U.S., Canada, and Puerto Rico. The company offers branded and private label apparel, footwear, accessories, and home décor products. It is divided into two sections: international and domestic.
Ross Stores operates more than 1,500 discount stores under the Ross Dress for Less name in 38 states. The company’s stores are large, averaging 50,000 square feet. The average store carries more than 25,000 products that include brand-name and private label apparel, footwear, and accessories for the whole family, plus home decor items at everyday low prices.
Ross Stores targets middle-class families who want to save money on their clothing while still looking fashionable. Ross Stores’ revenue for the fiscal year 2017 was $12.2 billion, with a net income of $1.4 billion (which is down from 2016). Ross’s net income had increased every year since 2013 except for 2016, when it decreased by 9%. The company’s return on equity was 18% in 2017 versus an industry average of 15%.
Costco has also seen a decrease in net income for the last two years; however, its return on equity is much higher than Ross’s at 29% in 2017 versus an industry average of 15%. Costco’s revenue increased by 8% in 2017, while Ross saw no growth in sales during this period.
The Home Depot, Inc. (H.D.)
One of the similar companies is Home Deport. Arthur Blank, Bernie Marcus, and Pat Farrah launched the firm in 1978. The Home Depot is the world’s biggest home remodelling merchant and one of the country’s greatest manufacturers. The corporation has 2,220 retail locations across the United States and Puerto Rico and its territories.
The Home Depot’s headquarters are located in Atlanta, Georgia. The corporation engages over 300,000 individuals globally (such as part-timers), ranking it one of the country’s biggest independent employers. In the fiscal year 2018, The Home Depot had sales of $92 billion with total assets of $144 billion and total stockholders’ equity of $42 billion.
It sells a variety of building materials and supplies, including lumber, plumbing fixtures, electrical fixtures, and hardware. The company also offers kitchen cabinets, bath vanities, and other home decor items for sale online.
In addition to retail stores, The Home Depot operates four distribution centres in Georgia, Louisiana, Texas, and California. These facilities store inventory for its retail stores and make deliveries to them by truck.
Among America’s largest corporations, Fortune ranked it No. 11 in 2019. On March 1, 2019, it was announced that CEO Craig Menear would step down from his position in May 2020 to be replaced by Chairman Frank Blake.
Final Verdict
Costco tends to be more of a niche retailer in the grocery industry. Their niche nature is still apparent even when comparing to Costco. Each comparison shows how Costco has or has not performed compared to its competitors over the past 3-years. These comparisons allow investors to see where Costco is performing well and where it is underperforming.
