Big Data Download

Costco Shoppers in a Market of Their Own: Analyst

Big Data Download

Wholesale shoppers and deal seekers at Costco may be looking for low prices, but they're not the same bargain hunters that frequent other warehouse stores, according to one analyst.

Costco shoppers are looking for more brand-name items than those at discount warehouses like Sam's Clubs and BJ's, Oppenheimer retail analyst Brian Nagel said on "Big Data Download."

Rising consumer sentiment has helped Costco's sales growth, which tends to come in around the mid to high single digits, Nagel said. But Costco's customers were actually less affected by broader economic conditions, he said.

RELATED: Latest Sign of Job Market Health: Quitters

"They focus more on the upper-end consumer which has proven more resilient than consumers broadly over the past several quarters," Nagel added.

"I view Costco as really much more of a broad-based retailer that competes with all different kinds of stores: grocery stores, consumer electronics retailers," Nagel said. "I think the biggest differentiating factor for Costco is simply their merchandizing. The tend to skew high-end."

RELATED: Costco Scores as a ‘Pure Play’ Brand: Analysis

And while the retailer has generally been going strong, according to Nagel, a decline in consumer confidence and a reduction in the number of customers who renew their memberships at the warehouse club could impact Costco's bottom line, Nagel wrote in a research note.

Costco founder and CEO James Sinegal retired last year, but as long as Costco keeps operating its business as it has been, Nagel said, he expects to sees continued revenue and earnings per share growth. Costco reports its quarterly earnings on Thursday.

View Comments (8)