Costco has been able to weather the storm from online retailers like Amazon by building a strong membership model and incentivizing visits to its physical stores — causing some analysts to call it “Amazon-proof.”
But its CFO Richard Galanti doesn’t believe his company will be immune to the growth of Amazon forever.
“We don’t buy that for a minute,” Galanti said during Costco’s earnings call Thursday, referring to previous reports that dubbed his company “Amazon-proof” or “Internet-proof.”
Galanti also admitted that he’d expect internet retailers to continue to make an impact on traditional big box retailers. Earlier this week, Cowen & Co. published a report indicating Amazon’s Prime membership program is growing at the expense of traditional warehouse club brands like Costco and Sam’s Club.
“At the end of the day, we will expect that. The internet in general is going to take its percentage of different categories,” he said during the call.
Instead, Galanti said Costco will continue to focus on improving its in-store experience, while slowly expanding its online presence as well — although he doesn’t see the company offering on-demand delivery service, like food deliveries, any time soon.
“Our value proposition is best served for us when it’s in-store getting members to come in and buying when they can see everything there that we have,” he said.
One area Galanti cited as seeing more expansion was the apparel business. He said Costco has seen strong growth in the space for three consecutive years and that “a lot of traditional retailers” are seeing a similar trend. He also doesn’t see a whole lot of people suddenly ordering fresh food online anytime soon.
The problem is Amazon is putting a lot of resources on both the apparel and fresh food delivery sides lately. In fact, Amazon is already the largest
seller of clothes online in the US and second only to Walmart in terms of overall apparel market share. It also offers fresh food delivery in dozens of cities, while the company’s rumoured to be doubling down on its last-mile delivery network in part to further improve its on-demand offerings.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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