Costco isn’t known for being a digital innovator in retail. But it’s nevertheless on a mission to upgrade its website and mobile app for its members, many of whom shop online and want to use their phones inside stores.
The wholesaler’s CFO, Richard Galanti, detailed to investors during the company’s fourth-quarter earnings call Tuesday recent changes and those about to get underway as part of broader “digital mobile transformation efforts.”
The wholesaler recently redesigned its digital membership card that’s available in its app. It has also made updates to its website, including a redesigned site header with a larger search bar, Galanti said on the call, according to a Seeking Alpha transcript. There are now message capabilities and new space for advertisements in the app, he added.
A few months ago, the retailer opened a digital optical store where consumers can virtually try on glasses and then order them for pickup, he said.
Ongoing improvements in the app include offering in-warehouse shopping tools for customers, such as a digital membership card, barcode scanning in the app, a shopping list management tool, a warehouse savings tool and the ability to see fuel prices for nearby gas stations, he said.
During Costco’s Q3 call in May, Galanti told investors that the company had made three “small releases” to its mobile app with “plans to have small improvements in that app each month for the several months going forward.”
On that call, he noted that Costco has made top leadership hires within the year to support the company’s efforts to improve its e-commerce website and mobile apps.
With the improvements made over the past year, Costco’s app store rating has gone “from a dismal 2.3 stars to currently 4.7 stars,” Galanti said this week. Unique visitors to the site are up 40% year over year and Costco app installs are up 46% year over year, he added.
The updates come as Costco plays catch up on the digital innovation front, with Galanti telling investors in 2021 that the retailer is “sometimes late to the game” on mobile and digital shopping tools.
Competitors have also been making upgrades to their apps as consumers increasingly shop across channels and use their phones to shop both online and in-store. Sam's Club has been evolving its Scan & Go technology in recent years, including piloting in 2021 a program that allows members to scan products using the Scan & Go feature in the Sam’s Club app and have them shipped to their homes or any desired destination.
The following year, Sam’s Club started accepting Electronic Benefits Transfer payments for SNAP participants with its Scan & Go service at participating locations. BJ’s Wholesale Club, meanwhile, has been rolling out SNAP online purchasing for its site across states.
For Q4, which ended Sept. 3, Costco reported net sales of $77.43 billion, up 9.4% from the same period last year, and U.S. comp sales up 0.2% for the same time period.
While the retailer’s e-commerce sales shrunk 0.8% year over year in Q4, Galanti said that the company’s e-commerce services “showed good improvement.”
The wholesale chain operates 861 warehouses, of which 591 are in the U.S. and Puerto Rico. It opened nine net new warehouses in Q4 with five of those located in the U.S. Of the 10 new warehouses slated to open during Costco’s first quarter of fiscal year 2024, nine will be located in the U.S. and one in Canada.
Jeff Wells contributed reporting.
