In the latest edition of Omni Talk’s Retail Fast Five, sponsored by the A&M Consumer and Retail Group, Avalara, Mirakl, Ownit AI, and Ocampo Capital Chris Walton, Anne Mezzenga and guest host Joe Laszlo of Shoptalk discuss: If Costco & Sam’s Are The Choice Of A New Generation?

For the full episode head here: https://youtu.be/XlWTHMPWRDU

Costco and Sam's Club are successfully attracting younger generations, with a significant increase in memberships among Millennials and Gen Z. Recent statistics reveal that approximately half of Costco's new signups are under 40, while Sam's Club has seen a remarkable 68% increase in Gen Z memberships over the past two years. The discussion delves into the factors driving this trend, including the financial pressures faced by younger consumers, who prioritize value and quality in their shopping choices. Both retailers are positioned to meet these demands, but the conversation also highlights the competitive dynamics between Costco and Sam's Club, particularly regarding convenience and technological advancements. As the hosts analyze the implications of these shifts, they consider how changes in demographics and shopping habits might shape the future of bulk retail shopping.

Costco and Sam's club appear to be winning over the younger generations. According to Business Insider, during Costco's recent fourth quarter earnings call, CFO Gary Miller Chip honestly, Ann in the running.

Ann and Joe in the running for my favorite CFO, name of all of retail, Gary Miller Miller Chip. Miller Chip. I just like saying Millard ship. It's Miller chip time. And dropped a bob show.

Approximately half of the company's new signups over the past year. We're under 40 years old. To put that into perspective, we're talking about, this is crazy.

We're talking about two and a half million millennial and Gen Z households willingly paying for the privilege to shop in bulk. And not to be all done.

Walmart owned Sam's club is reportedly is reporting, excuse me, equally impressive numbers saying Gen Z membership has skyrocketed by 68% in just the past two years. And let's go to you first on this one.

Do you think Costco and Sam's are just enjoying the benefits of shifting demographics, or is there something also in the water here that is making these two the Pepsi choice of a new generation?

Zachary Chris, I feel like you're asking me to explain dad core and why this has gone beyond, like, new balance sneakers and Kirkland brand clothing. Like, but somehow this is, this started a trend and a wave. And yes, Gen Z wants to save more money.

I mean, I pulled up a couple of stats about Gen Z just to kind of give our audience a little bit of a table set, I guess, for, you know, where Gen Z is, that they spend more on housing and insurance than millennials and other generations. They have more debt than other generations.

They spend more on travel and experiences, and they are more value driven than loyalty driven, which all adds up to, like, yes, of course. Why wouldn't they be going to Costco and be going to Sam's club?

So I think when you look at that generation and you know how they're spending money, where they're spending time, they want quality products, too. And Costco and Sam's club are able to pay this off at a rate that many other retailers cannot do.

They can't have this assortment in this, this product that's really giving them the value for their money. So I think that this is not a surprise at all.

I think it's going to continue, especially as we see, you know, more Gen Z and millennials spending a greater percentage of their income on, you know, housing, food, apparel, and personal care, all of which Costco and Sam's club are able to provide them. So, yeah, I'm in. Joe, so you think this is kind.

Of just a confluence of factors. Macroeconomically, what Costco and Sam's club do? Well, it's just kind of like, yep, you kind of expect this going in. Joe, do you agree with that?

And Gen Z and millennials are growing up and starting families and kind of moving out of their small starter apartments to larger apartments or to the suburbs as well?

I think partly this is just that cohort is now kind of reaching the stage of their lives where they can buy in bulk, they have space to store 50 rolls of toilet paper, and the desire to be frugal and save money is certainly a contributing factor as well. But in some ways, this isn't that new. I was looking around a little bit yesterday.

Now you'll say seven years later, it's the gen Zers who are kind of doing that, that house and family thing.

Right? What about the Sam's club angle?

Like, are you surprised that both are picking up share here, or do you think that is just a natural outgrowth of everything that you just both talked about? What do each of you think about that? Ann?

I think it's going to be really interesting to watch how this progresses because I think that, well, Costco kind of is like the target in this case. And Sam's club, to me, is kind of like the Walmart. Like they're both neck and neck.

But I think that it's going to be interesting to see a big part of this is merchandising and accessibilities to the stores and Costco, unless they start to change things, I think Sam's is likely to kind of continue to beat them because of the things that you were talking about last week, Chris, about the supply chain. Like convert the supply chains converging at Walmart and Sam's Club.

Like, if you have more flexibility, more convenience for consumers than what Costco's offering, like, this could be Sam's club could be, like, coming in hot here.

And I think really starting to steal some share from Costco the same way that we're seeing, like Walmart from the last story kind of come in and steal share from Target. But what do you think, Joe?

Well, let's go to Joe first. Joe. Joe's chopping at the bid.

Here I am. So I think there's a couple of factors in terms of Sam's versus Costco. Right. I think partly it's what your parents did. Right.

If you're a Gen Z and you're kind of setting up your own household, and you grew up going to Costco with your parents, that's probably where you'll go first. But it's also what's closer to wherever you're setting up your household. Whatever is more convenient to you.

But I do think there's an interesting opportunity here. And my always unscientific way of thinking about who's really trying to appeal to Gen Zers is to look at TikTok. So Costco has an official TikTok.

It's got 101,000 followers. They haven't posted anything, though. It's like empty. Sam's club has 183,000 followers on TikTok and 1.4 million likes on videos that it's posted.

And the control group, Target Target has 3 million followers on TikToks and 20.4 million likes.

So I think either of them could boost their appeal with the youngest demographic that's kind of in that, in that nesting phase, but they both have a ways to go.

Robert?

Yeah, it's interesting. I'm glad I got the question, because I actually did some research yesterday, too. I just did a quick Google search.

I thought there were less Sam's club stores throughout the US than there were Costco stores, but roughly, they're even. But to both your points, and Joe, I love the TikTok statistics as well.

And I love the points you brought up, too, is if I was to bet on who's going to grow more or return more money to their shareholders here in the next ten or 15 years, and do not take this as financial advice, anyone. I'm just like, just pontificating here. I would bet on Sam's club for a couple of reasons.

Like, one, we talked about it last week, but with the supply chain merger, you have the potentially untapped combination of making a Walmart shopper a digital shopper at Sam's club and vice versa, which is the crux of the, of the decision last week, I think, in the long run, and that's a really powerful statement when you think about that, that you can make a digital shopper at Walmart a shopper at Sam's club. Think about that for a sec. And then the second thing is there's so much. You guys hit it.

There's so much more technologically advanced than Costco, for example, like their scan and go application. What? And what is it? 50% of shoppers use their scanning applications and they're putting retail media through it.

And we had, we had discussions about how coke can now incent you and path you through the store through retail media on your handheld device, you know, in theory. So that's. That's hugely powerful and, and valuable to this shopper who wants to shop this way. So I'm.

I'm betting on Sam's, like, in the long run, I really am.

Chris.

I think the other thing that you bring up, too, and Joe mentioned this, it does come down to it's kind of like Ikea in this way, where, like, this Costco trip is like a trip.

You, if you are an urban dweller, which a lot of these, this young generation is like, you have to figure out how you get a car, how you haul all this stuff back, too.

And I think that's another key to the success, potentially, of Walmart, is that if you are able to go on Walmart, you're starting your grocery trip there and you see like, okay, my kids love these applesauce pouches, and I can get a 50 pack of them and have those delivered. And I don't have to make the trip to Sam's club, but I still get access to that Sam's club, you know, price point.

That is huge, and that saves a trip, and especially for those young families, like Joe said, like, that's a huge savings for them. And I think, to your point, like, just kind of catapult Sam's trajectory as kind of sealing favor for. From that demographic.

Yeah.

And then you get me thinking, too. And Sam's club membership merge with Walmart. Plus, in the long run, like, there's so many options here and so much option value in this discussion.

Joe, you're in New York. How often do you go to Costco?

Once a year when I'm visiting my family out in the more normal parts of the United States.

Okay, so there you go. There you go. You could become. Yep. You could become a Sam's club shopper digitally via Walmart.

Joe's just got to wait for them to bring jet black back. Jet.com black service back.

Somebody run talk to my concierge about bulk ordering my apple.

Yeah, right.

Exactly. Exactly. Joe.