At a time when retailers in the apparel industry are going to great lengths to reinvent their stores and websites to hold shoppers’ interest, Costco has emerged as an unlikely success story, The Washington Post reports.
Clothes and footwear now generate more than $7 billion a year in sales for Costco; that’s more than Old Navy, Neiman Marcus or Ralph Lauren. Revenue in that category has climbed about 9% a year since 2015, outpacing sales growth for food and electronics, according to recent earnings calls.
Those are stunning numbers for a retailer better known for its no-frills stores and bulk everything. Its nearly 800 locations don’t have fitting rooms, mannequins or window displays. Instead, tops and trousers are folded and piled high on tables, where shoppers can find Tommy Hilfiger, Eddie Bauer and Calvin Klein alongside Costco’s own Kirkland Signature line.
“Costco has quietly become an apparel destination,” said Simeon Siegel, a retail analyst for Instinet. “It is clearly resonating with shoppers and winning over brands at the expense of department stores.”
Dozens of major retailers, including Sears, David’s Bridal and Gymboree, have filed for bankruptcy in the past two years. Others, like Macy’s and J.C. Penney, are closing hundreds of stores as they try to figure out how to win back shoppers who have migrated online.
Costco, though, continues to do about 95% of its business in-store. Its 85 million members pay an annual fee, which starts at $60.
Costco stores, analysts said, have become an attractive destination for brands to offload unsold merchandise without tarnishing their reputations. Another key to Costco’s success: It offers few choices. Today’s shoppers don’t want to rummage through racks of clothing or decide between dozens of styles of jeans. Read the full story.