After our morning visit with Google, we all piled into a very small van and headed out to Long Island, New York, to a town called Westbury, where we were to meet with the Costco store management team. After a very long (and hot) drive, we finally made it to our meeting with General Manager, Rob Coope and Assistant Store Manager, Michael Liszewski and they began our Costco tour. Initially, as a group, we were fascinated by the sheer size of the products within the store and were keen to know more about the customer base that purchased these 'huge bulk' items. Rob told us that the surroundings suburbs were quite affluent and they actually received a large contingent from New York City as they were the closest store to Manhattan; being only 20 miles from the city centre. With such a large customer base, Rob told us that they have the highest amount of foot traffic of any store on the east coast of the US. Due to the sheer size of the product, we were convinced that customers must only frequent the store monthly, but Rob and Mike assured us that their customer base visited the store, on average, every 10 days and this was largely to purchase food. The average transaction value is up around USD$140 for this store, with between 10 and 12 items sold per transaction. Astonishingly, Costco Westbury sells 5,000 hot chooks per week and has found this recent addition to the store has been a real hit! They also proudly told us they sold USD$1 million worth of Australian lamb per year.
In terms of product display, we were all amazed at the warehouse style format, pallet racking was stocked to the rooftop, offering a wide variety of products including televisions, jewellery, outdoor furniture, appliances, food and wine (mostly sold in bulk) and apparel. Prior to visiting the club operator, we assumed that unknown branded products justified their well-known low prices. What was surprising was that their offer actually consisted mostly of national brands sold at very competitive prices. They have a smaller range, in a few categories, of their Kirkland Signature private label. Rob and Mike told us that the Costco method is to source just a few of the best quality products at the lowest prices, in order to control their SKU count.
Different to the traditional Australian method of shopping for fewer items every couple of days, the Costco way enables larger families and local business' to replenish as frequently as they require and shop for bulk amounts. But the Costco team did admit that their particular customer base consisted, mainly of individual household shoppers rather than small business, which was even more surprising for the group!
