Costco Buyer’s Discussion: Looking at 2021’s Strategy

As Canada’s number 2 retailer, currently operating over 100 warehouses across the country, Costco has maintained the same business model of bringing the best products at the best prices to their members for 35+ years.

I recently attended a roundtable with four members of Costco’s management team to learn more about the banner.

  • Consumer Insights & Trends
  • Strategy
by Josh Cairns
April 20, 2021

The webinar was focused on what Costco continues to focus on in 2021, as well as some of their key considerations when looking to drive business and add new products to their shelf.

Here’s a high-level view of that conversation, of Costco’s three key pillars, and our takeaways for those brands looking to list their product with the retailer to keep in mind.

Costco’s Three Key Priorities

The Warehouse
The Costco warehouse. This is the shopping experience buyers have come to know and love. When you think “Costco”, you undoubtedly think of the large-scale warehouse and shelves stacked high with products unbeatably priced.

Penetrating the warehouse is a goal for many of the CPG brands we work with (and many more we don’t, yet!). And the great news is Costco is consistently on the look-out for both national and regional brands to bring new and innovative products to their members.

If you are working towards listing your product in Costco’s warehouse specifically, a few considerations to keep in mind:

  • Category – Is your category saturated in the warehouse or is there good opportunity to own the shelf?
  • Product benefits – How does your product benefit consumers? What are the usage occasions it might support? What gaps does it currently fill for consumers?
  • Trends that you support – Keto was a trend, now it’s a known claim. What consumer trends are you connecting to with your product?

eCommerce
eCommerce has seen significant growth in demand and usage as a channel, and Costco is by no means an exception here.

While that physical shopping experience may be the first thing that comes to many buyers’ minds when they consider Costco, eComm may actually be a great opportunity for increased distribution of your product.

Many of the products sold in warehouse are also listed online, however there are many other products not currently present in the warehouse that can be found on the Costco site.

The Costco team highlighted that significant resources will continue to be deployed against the online platform as they continue to see growth and engagement. If you are a brand looking to penetrate Costco, the online platform could be a great place to start.

Business Centre
A lesser-known pillar that Costco is bringing back to the forefront, the Costco business centre is a unique product offering for B2B businesses that supports larger-quantity delivery. What this means is you could use Costco in your restaurant, food business, or place of business.

Two business centres are currently operating nation-wide, with a plan to have business centres in every major city across Canada up and running within 5 years.

Key Takeaways

Selling to Costco

When strategizing to sell to Costco, remember:

  • Consider all your options.
    If you’ve been trying, but are struggling to get your product into the Costco warehouse, a strategy pivot may not be a bad idea. Consider the other two priorities Costco is focusing on and look for opportunities to penetrate the retailer there.
  • Remember Costco is open for business.
    They want to work with national and regional brands alike, and are always on the lookout for foods that support Canada’s multi-cultural landscape and ethnic populations.  
  • Find the right strategy for your brand.
    You don’t necessarily need the capacity to roll out to 100 different warehouses to work with Costco. They work with regional brands, and they support in-and-out SKUs for different seasons. There may be more opportunity for your brand than you think there is.

How to Approach Costco

You don’t need to feel intimidated by the idea of approaching the retailer. If one channel isn’t right for you, that doesn’t mean none are. Remember to:

  • Approach Costco as an omni channel plan .
  • Think about how your product line can support their strategy through their 3 key pillars: Warehouse, eCommerce & Business Centre.

For many brands the idea of penetrating Costco is both exciting and daunting at the same time. Remember that they want to list brands and products that are regional, have unique value to them, support the multicultural landscape of Canada and have multiple channels to list through.

If you’re still not sure which pillar is right for your brand or how to best penetrate the Costco market, we would be happy to discuss a strategy with you.

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