The Warehouse Club- Costco (NASDAQ: COST) has had a colossal growth over the past two decades in the Retail Industry. According to a report published, this unanticipated growth of Costco has surpassed the operations of the leading internet based retailer- Amazon. Issaquah, Washington based Costco, formed in 1976, is the third largest retailer across U.S that provides wide range of merchandise. The Company has strong footholds in U.S, and it also operates from countries such as Canada, the United Kingdom , Australia , Mexico, Taiwan , South Korea , Japan , and Spain.
As proclaimed in a recent report, the retail industry is experiencing a massive transmutation due to the increasing warehouse clubs across U.S. Besides Costco, the Sam's Club along with few other clubs has also crossed the sales reported by e-commerce. According to the census Bureau data, the retail industry which covers e-commerce has accelerated its sales process from $35 billion in 1992 to $348 billion in 2013, which is exactly tenfold. Compared to the sales in the year 1992 there has been rise in sales touching around billions because of format like catalog sales. In the interim, the warehouse clubs had 10.5 fold sales from $40 billion to $420 billion, which is even more than the e-commerce industry. Additionally to over shine further, the Warehouse clubs also has been locating stores in most populous areas around the city.
Researchers from University of Chicago- Ali Hortacsu and Chad Syverson had jointly studied the evolution of retail sector over the last 15 to 20 years, with regards to, the relative size and growth curves of Warehouse clubs and e-commerce sites. They had published their study in new National Bureau of Economic Research working paper which validates that warehouse clubs have had a greater effect on the retail landscape than e-commerce. Besides, these researchers to support their statement has also underlined the financial results of Amazon between 2000 and 2013 which is nearly $38 billion, whereas on the other side, Costco went up $50 billion and Sam's Club attained a $32 billion increase. Together the 4 big-wig Warehouse club reflects 8 percent of retail sales in 2012, which is exactly 50 percent more than all e-commerce retail sales in that year.
The Digital move which commenced in 1990’s with the arrival of e-books and digital music now holds a major market place as e-commerce maneuvers the industry. With the incorporation of online subscription services such as Stitch Fix or Birchbox, there lies no doubt that retail which includes e-commerce and warehouses have changed the business dramatically. The myth prevailing during the initial stage of online shopping that this new method will completely wipe out the operations of brick-and-mortar stores was proved wrong by the researchers from their study. However, the brick and mortar stores present around the city are not withering as it still holds the lion’s share of the market place. The latest reports of Commerce Department data and Deloitte consultancy projects also bolster the existence of brick and mortar stores.
Although, the research conducted by Ali Hortacsu and Chad Syverson doesn’t highlight the fact how the rise of e-commerce business has impacted the mind-sets of the retail buyers. Undoubtedly, there is no disarray about the increasing influence of e-commerce and warehouse clubs in the industry. As the retail opportunities have augmented with digital transformation, even the industry giants like Wal-Mart, Macy’s and many big wigs are reshuffling their marketing strategies to affluently transform into an agile online Retailer.