Costco uses this winning 6-part formula that makes it the anti-Walmart (2024)

FAQs

Who is more profitable, Costco or Walmart? ›

Walmart is significantly bigger in revenue (almost three times) and puts a higher operating margin on the products it sells (24,8% vs 12,9%). Despite the more lucrative financials, Costco operates a very efficient model getting the best productivity out of its square feet (+211% more sales per square feet) and people.

Costco's operation is small compared to Walmart's scale. The company has 9,000 fewer stores and held just 2.3% of the US retail market share as of 2022.

Costco takes a small markup

That means that every sale pays for a little piece of labor, rent, utilities, and any other overhead costs, Walmart has made between 23.1% and 24.9% in gross profit margin between 2006 and 2023, according to data from Statista.

Employee Ratings

Costco Wholesale scored higher in 10 areas: Overall Rating, Culture & Values, Diversity & Inclusion, Work-life balance, Senior Management, Compensation & Benefits, Career Opportunities, CEO Approval, Recommend to a friend and Positive Business Outlook.

Costco makes some of its profits from its merchandise, but the bulk of its profits come from membership dues. Only members can shop at Costco. The membership business model allows Costco to undersell the competition by offering products in bulk at lower prices to ensure customer loyalty.

Costco Wholesale Corp's (COST) main competitors in the highly competitive retail market of large discount stores are Walmart Inc. (WMT) and Target Corporation (TGT). These companies are also sometimes classified as consumer defensive stocks.

Costco is a publicly traded company, while Sam's Club is a subsidiary of Walmart.

Toilet paper

Costco's best-selling item is its Kirkland Signature Bath Tissue. It sells more than a billion rolls every year, bringing in over $400 million dollars in revenue. Costco's toilet paper is thicker and more absorbent than most other brands. It is also less expensive per sheet than many other brands.

Coffee and Specialty Beverages: Coffee has one of the highest markups in the food and beverage industry. This includes specialty drinks like lattes, cappuccinos, and iced coffees. Baked Goods: Items like cakes, cookies, and pastries usually have high-profit margins.

How much money does a Walmart store make a day? ›

On average, a U.S. Walmart store pulls in $1.1 billion annually, which translates to roughly $3 million in sales every single day. Breaking it down further, Walmart (globally) earns more than $6.97 million on an hourly basis.

Costco's financial performance and competitors

In 2022, Walmart generated almost three times as much retail sales as Costco. Other competitors, though not as large as Costco, are Target and BJ's Wholesale Club.

There's no doubt that Costco has been incredibly successful from a financial perspective. And this has resulted in the stock rising almost sixfold in the last decade. As a result, the company carries a market cap of $308 billion today. Furthermore, Costco is the world's third-biggest retailer in terms of net sales.

In terms of net sales, Costco ranked number one generating more than double than its counterpart Sam's Club, and twelve times more than BJ's Wholesale Club. Concerning locations in the United States, Sam's Club operated slightly more warehouses than Costco, while BJ's had a little over 200 stores across the territory.

Hourly pay at Costco Wholesale Company ranges from an average of $13.97 to $29.81 an hour. Costco Wholesale Company employees with the job title Meat Cutter make the most with an average hourly rate of $20.20, while employees with the title Cashier make the least with an average hourly rate of $16.51.