Costco spares most expense when it comes to offering any sort of frills. The warehouse club generally does not spend money on things which do not directly translate to lower prices for members.
That’s why its warehouses are no frills affairs where merchandise remains on the original pallets it came in. The company does not just call with locations warehouses, they are actual warehouses.
Related: Costco members blast company over failed gourmet product
Basically, the chain saves money by not having to handle items multiple times. There’s no storage area in the back where items have to be brought or customers are.
Instead, the back is actually the entire store and there’s not much in the way of traditional retail displays. Yes, you might see some level of items being placed on shelves, but that will be matched with large quantities of that item nearby.
This does not mean Costco (COST) executives don’t think about customer experience. They absolutely want people to have an easy time shopping.
Don’t miss the move: Subscribe to TheStreet’s free daily newsletter
They accomplish that, however, by really looking at their process and only investing in technology when absolutely necessary. If, the company does decide needs to invest in something, it will test it fully and then roll it out to the entire company.
It’s a very efficient process, focused on delivering the best possibly experience for members.
Image source: Fallon/AFP via Getty Images
Costco focuses on key area
Analyst Edward Kelly asked Costco CEO Ron Vachris about its efforts to get people out of its stores faster during the chain’s second-quarter earnings call.
“I wanted to ask you about throughput in the stores. Maybe you can talk just a little bit about like where you are from a standpoint of initiatives to drive better throughput. I know you’re scanning now when people are coming in,” he asked.
Vachris seemed very happy with the question.
“The speed of the checkout is one of our primary focuses right now and what uses of technology we have,” he said.
Costco actually uses its check-on technology for more than just making sure only members shop in its clubs.
“Scanning at the front door was very, very helpful for our operations, really kept our people informed on what traffic looks like and they can adjust opening up registers and closing registers, and we saw some great improvements in productivity from that as well. That was just the foray into the whole technology thing,” he said.
More retail:
- Walmart CEO sounds alarm on a big problem for customers
- Target makes a change that might scare Walmart, Costco
- Top investor takes firm stance on troubled retail brand
- Walmart and Costco making major change affecting all customers
Vachris also believes in other technology his chain has adopted.
“So, we see many things going with self-checkout, how we can improve that. And so, that is indeed one of our biggest areas of focus for technology in our warehouses is how we can get members through quickly and turn parking spaces and do those types of things is a big push for us. Yes, the scanners were a very big win for us,” he added.
Data shows Costco something surprising
Costco may not seem like a technology-forward company but it’s actually using data to consider extending store hours.
“That is something that is not off the table. We do look at that. I mean, our gas expansions, we have 60 U.S. gas stations going through different — they’re at a different phase in expansions now,” Vachris said.
Costco has been testing different hours at its gas stations. It has not made any permanent decisions on extending hours at those locations.
Related: Home Depot quietly makes a change that may enrage customers
“We did see some demand from the commuters, both at the early hours and the evening hours, so I think that that’s going to be a real benefit to those folks as well. But we will continue to look at the warehouse hours. No plans in place at this time,” he added.
