Many older Costco locations have a parking lot problem.

They were built with parking lots that did not offer space to add a gas station, which also lacked enough parking to serve members. That lead to members having to wait for spaces, a bad experience which leads to people visiting the warehouse club less often.

Costco has worked to improve the experience by streamlining checkout.

“In the warehouse implementation of scanning memberships at entry, the Costco Digital Wallet and pre-scanning small- to medium-sized baskets is leading to better member experience and improved productivity,” CEO Ron Vachris share during the chain’s first quarter earnings call.

Faster checkout frees up parking spaces and allows more members to shop efficiently.

“The implementation of scanning memberships at warehouse entries and pre-scanning of small to medium-sized baskets has improved the member experience by increasing checkout productivity by up to 20% in some locations,” according to Zachs analysts.

That’s something Vachris noted as well.

“Across our U.S. warehouses overall, we achieved record levels of checkout productivity in the final weeks of the quarter,” he added.

Costco is also making major investments to improve the in-store experience.

Costco builds and moves warehouses

Costco continues to grow its warehouse portfolio globally.

“We’ve been about 50-50, half of the expansion in the U.S. and half outside of the U.S. And now we’re seeing even more opportunities in Canada and North America and Mexico. So a good balance, about half of the 30 should be outside the U.S. we see in the next 5 years,” Vachris shared.

The chain also relocates warehouses when existing locations no longer meet member needs.

“Expansions and relocations, we normally do about 5 to 6 relocations a year. The uplift is dramatic,” he said.

He shared why Costco chooses to relocate some warehouses.

“When we do these, we normally are moving a building that is underserving the market and goes into a larger facility, better parking. If we have a gas station, expanded gas or we add gas to it and a wide variety of uptake to extreme 50%, 60% increases when you add a gas station and really add a lot of parking to a 20% uplift to a building that had everything just got into a better facility,” Vachris added.

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Costco continuously updates existing warehouses.

“We are continuously investing in our current warehouses, too, to make sure that we’re updating the fresh foods areas. We’re bringing the new ancillary businesses in there. So it’s a process we go through every year of planning ahead, and we look out several years and a good combination of all 3: new locations, relocations, and taking care of the existing buildings that we’re doing business in as well,” he said.

Costco’s food court drives business and is only open to members.

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Costco makes smart investment decisions

Costco’s strategy has drawn praise from multiple industry experts, highlighting both its strengths and areas for growth.

Gary Sankary, a retail veteran with 50 years of experience, sees little reason to question anything Costco does.

“Costco has been incredibly successful, and not by accident. They place their stores in markets where they are likely to succeed. This means the market has the right population density, the right economic and competitive profile, and can be efficiently supported by their supply chain,” he posted on RetailWire.

At the same time, analysts note opportunities for improvement.

“Costco can improve in areas like collect from store, checking what’s in stock at the warehouse, and making the ecommerce process easier,” GlobalData Managing Director Neil Saunders posted on RetailWire.

Independent data supports these insights. Warehouses that implemented modern inventory and digital tools saw a 5–10% increase in member visits and basket size, showing measurable benefits from operational improvements, according to a 2023 IHL Group report.

Brian Delp, who serves as a a board member of the Home Fashions Product Association, believes that Costco can evolve by delivering a better member experience.

“There are certainly ways Costco can evolve with technology while staying true to its core values. A big element to Costco is the lack of frills, however, reducing friction for the consumer and simplifying the experience is related,” he wrote.

The warehouse club’s slow and steady approach will help it win, according to David Biernbaum, who has over 40 years of retail experience.

Costco is accused by critics of being slow to adapt change, including certain technologies, but that’s part of what sustains the workable business model. Certain new technologies will not hurt the business model, and those are the ones that Costco will embrace, especially if efficiencies are improved even more so than they already are.

Related: Costco quietly reverses a decade-old food court decision