Costco CEO: Digital Sales Outpacing Overall Growth on ‘Tech Journey’
Costco is proving that its digital transformation is more than just a buzzword — it’s driving growth. As the company continues to enhance its eCommerce offerings and streamline member experiences, its first-quarter results (Q3 by the calendar) for fiscal 2025 illustrate a combination of solid online performance and in-store success.
Digital growth played a major role Thursday (Dec. 12) during the company’s earnings call as eCommerce sales rose 13%, site traffic grew 16%, and average order value increased 4%. The company also saw 2.9 million app downloads in the U.S. and completed nearly 1 million deliveries through its Costco Logistics division. These digital results are key to Costco’s efforts to enhance the member experience, including improvements in online services, inventory management, and overall convenience.
“We’re pleased with the growth we saw in digital,” Chief Financial Officer Gary Millerchip noted to analysts. “It’s outpacing our overall growth. We’re never satisfied and we believe there’s more work to do to improve the member experience. We know we are on a tech journey and the goal is to keep getting better and enhancing the member experience and in doing that work we can grow our digital experience.”
Part of that digital growth is significant traffic growth.
“Our buyers and operators are staying relevant to members’ needs,” CEO Ron Vachris explained. “Our people are doing a tremendous job of knowing our customers. It goes back to the execution of the teams.”
This focus on customer insights is proving valuable as consumer behavior continues to shift toward eCommerce. According to the PYMNTS Intelligence study, “The Replenish Economy: A Household Supply Deep Dive,” 42% of retail subscribers visit physical stores less frequently due to their online subscriptions.
By the Numbers
Overall, Costco reported net sales of $60.99 billion, up 7.5% from last year, and comparable sales grew 5.2%. Costco, which raised its membership fees in September for the first time since 2017, to $65 from $60 for basic memberships and from $120 to $130 for Executive plans, reported a 7.8% increase in membership income, totaling $1.166 billion, with renewal rates of 90.4% worldwide and 92.8% in the U.S. and Canada.
Paid memberships rose 7.6%, to $77.4 million, while total cardholders grew 7.2%, to 138.8 million. Executive memberships comprised 36.4 million cardholders and represent 73% of worldwide sales. Top sales categories were gold and jewelry, hardware, gift cards, home furnishings, health and beauty aids, and sporting goods.
“We’re feeling very good about the underlying membership metrics, and membership growth remains very strong,” Millerchip added. “We’ve seen some shift in more members coming through digital channels and there has been a reduction in average age of members because of that shift as well.”
Consumer Buying Shift
Millerchip noted a change in consumer preferences, with members focusing on newness, quality, and value in their purchases. The company has seen growth in non-food categories such as jewelry, home furnishings, and gift cards, while a noticeable shift in spending from food away from home to food at home is evident, particularly in lower-priced cuts of meat. Costco is also growing its market share in many of these categories, including its Kirkland Signature brand.
“We’re seeing a lot of similar trends with our members from previous quarters,” Millerchip added. “Quality and value are very important to members and they’re being very choiceful.”
Elevating the member experience is a mission at Costco.
“Our focus is on, ‘How do we improve that member experience,’ Vachris explained. “We’re finding it to be incremental to the business, We want to keep the experience as strong as we can for our members. We’re working the back of the house on speed and stability and, in short order, people will see front of the house things come in.”
The post Costco CEO: Digital Sales Outpacing Overall Growth on ‘Tech Journey’ appeared first on PYMNTS.com.