Nearly half of Costco’s new members are under 40 as retailer bucks industry traffic decline

Costco has a new growing customer base: members under the age of 40. 

CFO Gary Millerchip told investors during its earnings call at the end of September that the membership warehouse is gaining an influx of younger shoppers. Almost half of its new member sign-ups during the three-month period ending on Aug. 31 were under the age of 40, Millerchip said on the call. 

The company also reported a 92.3% renewal rate across North America. The rate is down slightly from the prior quarter due to more people joining online, and those new online members don’t always renew right away. However, the company still sees online sign-ups as a net positive.   

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Millerchip credited this boost in younger shoppers to its online sign-up process, making it easier for those who prefer digital options over visiting a store in person.

The company said it ended the fiscal year with 81 million total paid members, which is up 6.3% versus last year, and 145.2 million cardholders, which is also up 6.1% year-over-year.

“That younger generation of members now also experiencing Costco, we think, creates continued opportunity to drive new member engagement in a broader range of the potential member base than we’ve historically seen prior to COVID,” Millerchip said. 

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Barron’s senior writer, Megan Leonhardt, said big box retailers, including Costco, are seeing an uptick in traffic due to the fact these companies are heavily focused on their value proposition and innovation.

Data from analytics firm Placer.ai underscores this. The firm reported last month that the company has seen growth in traffic since the pandemic, with visits up year-over-year every quarter since Q2 2021.  

Since then, same-store visits have also consistently increased, highlighting how the retailer is driving more traffic to existing stores and quickly building strong member bases at its new warehouses, the firm said in its latest report. 

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This data also shows the membership warehouse is bucking the broader trend of slowing brick-and-mortar traffic across the industry.

The firm announced in mid-September that retail and had declined for three straight months, “signaling a potential shift from temporary cooling to a broader consumer slowdown.” 

Even though higher earners continue to spend, middle- and lower-income people are continuing to cut back, which is driving this traffic slowdown and highlighting how risky it is to rely too much on high-income shoppers to keep the economy strong, according to Placer.ai’s report.