Costco is a big store that sells things in bulk with several competitors. It has a lot of competition in both selling stuff in bulk and how well they serve customers.
Costco is a store where you need a membership to shop, and they sell a variety of things like food, clothes, and more.
The company works in three parts: United States Operations, Canadian Operations, and International Operations.
Their membership program got bigger, going from 86.7 million members in 2016 to about 107.1 million cardholders and 59.1 million households in 2020.
But, the stores had more online sales in 2020. So, CEO Craig Jelinek said Costco will still pay attention to physical stores to grow.
Also, in November 2020, Costco made its warehouses bigger, going from 80,000 to 230,000 square feet.
Costco puts a lot of money into both its physical stores and online shopping.
Since 2021, Costco has done well and stayed strong against big rivals like Walmart and Amazon to keep its market share safe.
Still, besides Walmart and Amazon, other big stores and ones from different countries also compete with Costco.
In this article, we will share the top 10 competitors that challenge Costco in the business world.
Walmart, founded in 1962 by Sam Walton, operates more than 11,500 stores worldwide.
It holds the title of the world’s largest retailer chain and was the main rival to Costco as at 2021.
With a workforce of over 2 million spread across 27 countries, Walmart has an annual revenue of about $524.4 billion in FY2020.
It stands as the 19th on Forbes’ Global 2000 list of the most valuable brands.
Walmart offers different goods and services to include, apparels, appliances, electronics, home improvement, jewelry, games, household essentials, pharmaceutical products, and many more.
It also owns Sam’s Club, which a membership-only wholesaler that competes against Costco for bulk buyers. Walmart is undoubtedly, one of Costco’s top competitors.
Jeff Bezos established Amazon in the year 1994, and it has since become a global eCommerce powerhouse.
Costco’s annual sales of $118.7 billion see 25% attributed to its private labels, such as Kirkland.
Amazon has invested heavily to expand its private-label offerings and currently has 146 private-label brands and 640 exclusive brands.
These private labels can eliminate Costco’s main competitive edge.
Amazon is a household name in offering consumers value for money can help Costco fend off Amazon’s threat.
3. The Kroger Company
Founded in 1883 in Ohio, Kroger is one of the largest food retailers in the world. The retailer operates over 2,764 supermarkets across 35 states in the US. In 2018, Kroger’s partnership with online retailer Ocado delivered 20 automated fulfillment centers, more than 2,000 pickup locations, and 2,400 delivery locations by 2020.
These resources expanded Kroger’s reach to 97% of its customers and boosted its revenue for Q1 2020 by 11.5% year-over-year to $41.5 billion. Kroger has also built a stronger eCommerce than Costco, which boosted its digital sales by 92% in 2020. Kroger’s fulfillment centers and robust eCommerce makes it one of the top Costco competitors in 2021.
Founded in 1902, Target is one of the largest retailers in the world and a strong Costco competitor. It operates over 1,000 stores in the US alone and 360,000 employees spread across 50 states. Even though both Target and Costco are offering in-store and curbside pickup, Target’s initiatives are more effective and include Shipt, Drive Up services, and Target+ marketplace.
In 2020, Target’s gross margins averaged out to 29%, while Costco’s gross margins were only 13%. Target also has a membership program just like Costco. But Target does not charge annual membership fees, which gives it an edge over Costco.
5. Sam’s Club
Walmart-owned Sam’s Club offers a wide range of products that match Costco’s inventory item-to-item.
Over 50% of dollars spent in early 2019 on Costco.com came from appliances, electronics, and home improvement, while Sam’s Club attained only 15% of its digital sales from these three departments.
Sam’s Club now holds 5.1% of grocery sales share, while Costco holds just 1.2% and declined by 3.1 share points in the past few years.
It has established itself as the go-to retailer for bulk groceries online.
6. Walgreens Boots Alliance (WBA)
Simply known as Walgreens, WBA was founded in 1901 by Charles Walgreen and provides drug store services primarily in the U.S. and Europe. It has 400 distribution centers and more than 18,750 stores spread across 11 countries.
Every year, the chain’s distribution centers reach more than 25,000 pharmacies, doctors, hospitals, and health centers across the world. In 2020, footfall in its stores dropped by about 85% due to the crisis leading to a net loss of $1.71 billion in the third quarter. Its overdependence on medical services is a major weakness over Costco.
7. Home Depot is a Strong Costco Competitor
Home Depot was founded in 1978 and provides tools, construction materials, and other products for home improvement in nearly 2,300 stores across the US, Canada, and Mexico. The retailer launched the One Home Depot strategy in 2017 that integrated all its sales channels seamlessly to deliver the best omnichannel experience for its customers.
In Q2 2020, Home Depot’s sales rose 23.4% y-o-y to reach $38.1 billion, thanks to its integrated strategy. Currently, 60% of Home Depot’s online orders are picked up in-store. The strategy allows Home Depot to serve its customers where they want. It is a huge competitive advantage over Costco, which still relies on in-store purchases.
8. Tesco Another Costco Competitor
Tesco is a British chain of supermarkets that was founded in 1919. From a single store in the East End of London, Tesco has expanded across Europe and into Asia but still relies heavily on the UK market.
All consumers can shop at Tesco anytime but they’ll need a membership card to shop at Costco.
The lack of restriction gives Tesco an advantage in urban areas where consumers are purchase items on impulse or last minute.
9. Aldi a Costco Competitor
Founded in 1946 by the Albrecht family from Germany, Aldi is a popular supermarket chain. It has about 11,245 stores and has over 70,000 employees globally. The main strength of Aldi is its wide selection and budget-friendly prices.
About 98% of Aldi’s stock is high-quality white labels, while Costco’s inventory is a blend of name brands and private labels. Cost-savers in the UK buy 75% of their shopping at Aldi and visit Costco to top up 25% in non-perishable items. When it comes to cost-saving, Aldi is Costco’s top competitor.
Founded in 1963, CVS is the largest pharmacy services provider in the US. It also operates a network of retail pharmacy stores globally. Its pharmacy business contributed $121 billion, making up 47% of CVS’s $257 billion in revenues for 2020.
The company’s Long Term Care generated $74 billion and Health Care Benefits brought in $62 billion in revenues in 2020. CVS has gained the trust of consumers and offers original drugs, while Costco provides generics. A consumer who is more concerned about their health than cost-cutting will most likely choose CVS over Costco.
Conclusion for Costco Competitors
In an ever changing market where retail giants struggle for dominance, Costco has demonstrated its strength as a formidable contender.
This compilation of the top 10 competitors portrays the various landscape of companies competing for consumer allegiance.
With each rival introducing a distinction, and pushing the limits of innovation to enhance customer experiences and satisfaction.
As the retail sector adjusts, it is captivating to see competitors add up energy to establish their own spots, while Costco retains its leading stance.
Ultimately, the competitive drive among these firms directly enhances consumer experiences, propelling progress and enhancements that elevate the shopping environment for all.
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