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When it comes to fashion, Costco isn’t just about selling socks and underwear. The warehouse club giant has tapped into members’ desires to hunt for fashion treasure to grow its clothing sales to $7 billion annually, more than Neiman Marcus, Old Navy or Ralph Lauren, according to a Washington Post report.
The chain’s sales of apparel and footwear have been growing at a nine percent annual clip since 2015, based on Nielsen data, outpacing growth in Costco’s better-known consumer electronics and food categories.
On Costco’s third quarter earnings call, CFO Richard Galanti pointed to opportunistic buying as key to his company’s success in apparel.
“We can go in and buy huge quantities of something where the manufacturer's volumes have been cut by other merchants and really drive great value, and people love it,” he said (via Seeking Alpha).
The Post article pointed to Costco’s offerings of Adidas sneakers, Birkenstock sandals, Lucky Jeans, North Face jackets and Ugg boots as ways to keep members, who have annual household incomes of $100,000+, engaged and buying from its apparel and footwear selection.
Simeon Siegel, a retail analyst for Instinet, told the paper that Costco’s model offers a classic win-win-win for itself, its customers and vendors.
“If you’ve got a lot of inventory, dropping off a pallet at Costco and having it disappear by the end of the weekend isn’t the worst thing,” he said. “It’s a way to move goods without hurting your brand."