How the Young and the Restless are Taking Over Costco (and It's Not Just About the $1.50 Hot Dogs)

Truncated from the original - full link - https://tracydecicco.substack.com/p/how-the-young-and-restless-are-taking

Recent headlines have suggested that Gen Z is flocking to Costco, with many viewing membership as a rite of passage and a form of "adulting." But is there substance to these claims? I do not usually see too may Gen Z at my own Costco. I had wanted to dive in to find out more.

According to Costco's CFO, Gary Millerchip, about half of new member sign-ups in 2024 were under 40 years old, with the majority being Gen Z and millennials. This shift is attributed to the younger generations' desire to combat food inflation and rising living costs.

A survey by GOBankingRates found that 15% of respondents between 18-24 years old and 17% of those between 25-34 years old shop at Costco. This trend is driven by Gen Z's desire to save money and adopt creative strategies to reduce costs. One popular approach is pooling resources with roommates to split the cost of a membership and dividing bulk items among household members. This approach works sometimes, and other times, it does not. Sometimes the economics of this approach just fails.

While Costco has gained in membership from the generation, this practice has led to Costco missing out on membership revenue. To address this, the company has implemented new rules, requiring members to scan their physical or digital cards at the store entrance and show a valid photo ID.

TikTok, a platform popular among Gen Z, has also seen a surge in Costco-related ‘haul’ activity. A search for "Costco Shopping Haul" yielded 130 million posts, with many focusing on "adulting," meal prep, healthy foods, and clothing. The hashtag "costco clothing finds" has an astonishing 1.8 billion views.

To observe Gen Z's presence at Costco firsthand, I visited a local store and found that only about 5% of customers were from this age group, mostly comprising family units. However, the store was stocked with items that would appeal to Gen Z, such as family-friendly clothing, e.g., good deals on kids clothing, and healthy food options, such as organics.

It's clear that Gen Z is driving the surge in Costco memberships, and the company is taking steps to adapt to this demographic's preferences and behaviors. By understanding what appeals to this generation, Costco can continue to attract and retain young members.

https://tracydecicco.substack.com/p/how-the-young-and-restless-are-taking

#costco #genz #retail #TRD #konposit