Costco attracting more Millennial shoppers
The warehouse discount retailer, Costco, enjoys a cult-like following across the country. Not only is it the largest warehouse retailer in the country, it is actually the second-largest retailer worldwide. (The world’s largest retailer, Walmart, coincidentally owns Costco’s biggest rival, Sam’s Club.)
Like any success story, the reasons for Costco’s popularity are many and diverse. Yet one of its most important secrets to success is often overlooked. Costco enjoys a widespread appeal for younger consumers that has helped the company maintain its grip on the market while remaining relevant for people of all ages.
Step 1: Hook Them With a Good Deal
Several studies in recent years, most notably one by eMarketer, have emphasized the importance of deals and coupons for younger consumers and Millennials specifically. It seems that these young consumers (under age 35) appreciate, and even seek out good deals. However, they are especially likely to take advantage of those deals when they are able to access them digitally. Costco, in kind, has taken advantage of this tendency on two major fronts: social deals and digital coupons.
The LivingSocial Litmus Test
Last February, Costco mounted a campaign to attract young shoppers through one of their preferred mediums: social networking. Similar to Goupon, LivingSocial offers buyers localized deals meant to attract them towards new experiences and retailers. Costco’s deal sought to attract new members into its club by offering a generous list of “bonuses” for new members who purchased their $55 Gold Star Membership through the LivingSocial deal. With a package totaling more than $130, new members got perks such as a $20 gift card and free batteries along with their year-long membership.
This campaign, Costco reports, drew in a number of young deal seekers who liked what they saw.
Easy-to-Use Digital Savings
The second half of Costco’s strategy to attract and retain young shoppers is through their incredibly easy-to-use and convenient digital coupons. As the eMarketer report asserts, Millennials are mad for digital coupons and savings. Anything that saves time and paper is right up their alley. Costco takes these digital coupons to a new level by not even requiring members to load them onto their card.
Similar to supermarket loyalty card markdowns, each month, users’s cards are loaded with a specific number of savings on select items. Members simply pick up their monthly flier to read what the savings are. Currently, deals range from hundreds of dollars off of exercise equipment to $3.50 off up to 5 bags of Lay’s Oven Baked Chips. Check out all January 2017 deals here.
Step 2: Get More of What They Like
Getting young consumers into your store is only step one, however. Next, Costco has figured out a way to keep them coming back (and renewing that membership for $55). Their first and best strategy for this is through targeted product offers. Maintaining what they call “product nimbleness” with fewer than 4,000 unique SKUs available at any one time, Costco ensures that what they have sells. Furthermore, what they choose to sell is right on line with what young people want to buy. Thus, Costco has become a standard bearer in the industry for organics and other good-for-you shopping options.
In the new year, Costco also has plans to increase its digital footprint and stepping up its search ranking specifically. In addition, in response to the new Amazon Go checkout-free supermarket model, the company is investing heavily in a new radio frequency-based scan-and-go checkout system. All of these initiatives will help the company maintain its relevance among young consumers.
Step 3: Don’t Make a Big Deal Out of It
Finally, and perhaps most significantly, the emphasis Costco places on its simple, targeted marketing strategies over big, expensive campaigns is the final ingredient for its success. Unlike rival Walmart, you don’t see Costco’s name plastered on your TV or all over your banner ads. Costco is the country’s largest warehouse retailer, but you’d never know it. Why? Because it focuses on modern marketing strategies aimed at lasting results rather than gimmicks. Because of this, the company has gathered a large, loyal customer base, expanded it, and is looking towards a bright future.