Big-box superstores as bellwether indicators

Sally Herships Dec 8, 2011

Stacey Vanek Smith: Costco reports earnings today and other retailers will be watching. The wholesale warehouse chain is expected to see higher profits. But it’s not just the size of those profits or the size of Costco’s stores that interests other retailers.

Sally Herships explains.

Sally Herships: If you really want to understand the U.S. retail industry, there are three stores whose aisles you should browse.

Jeff Weidauer: Walmart. Obviously.

Along with Amazon and Costco. This according to Jeff Weidauer at Vestcom International. It’s a marketing company for the retail industry. Weidauer says Costco’s 596 stores are a great indicator of where lots of different products are likely to see growth.

Weidhauer: They’re buying milk, they’re buying eggs, they’re buying diamond rings.

Barry Berman teaches business at Hofstra University. Berman says smart retailers try to emulate Costco.

Barry Berman: It’s a firm you want to look at and see what they’re doing and see what they’re doing right.

One strategy from the superstore: opportunistic buying — looking for goods at the lowest possible price.

Berman: Because they only want a 17 percent profit margin, because they want you coming back.

But other stores want your business too, which is why they may be looking carefully at Costco today.

In New York, I’m Sally Herships for Marketplace.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.