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Costco total sales, comps rise in January

BY Alaric DeArment

ISSAQUAH, Wash. — Costco Wholesale Corp.’s sales increased 7% in January compared with January 2012, the club retailer said Thursday.

Costco reported sales for the five weeks that ended Sunday of $9.35 billion, compared with $8.74 billion a year ago. The month was one day shorter than last year due to the timing of the New Year holiday, which reduced total and same-store sales by about 2%, the company said. Comps in U.S. stores were up by 6%.

For the first 22 weeks of the fiscal year that ended Sunday, Costco reported sales of $43.77 billion, compared with $40.18 billion during the same period last year.

Costco’s stock was down by 11 cents in morning trading on the NASDAQ after opening at $101.77.

Though the increases in total sales and comps were about 1% above his estimates, analyst John Heinbockel of Guggenheim Securities rated the club retailer’s stock at "neutral," saying that January sales were "solid and generally in line with expectations" while expressing concern that Wall Street estimates of the company’s earnings per share in 2013 were too high.


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ComScore: Low awareness, retail access key barriers to widespread digital wallet adoption

BY Michael Johnsen

RESTON, Va. — ComScore on Monday released the Digital Wallet Road Map 2013, a study which measures consumer awareness, perceptions and intent to use current digital wallet offerings. The study found digital wallets, which store a virtual copy of the contents of a consumer’s physical wallet to facilitate online or offline retail transactions, only had awareness among 51% of U.S. consumers for wallets other than PayPal.

"Digital wallets represent an innovative technology that has not yet reached critical mass among consumers due to a variety of factors, including low awareness and a muddied understanding of their benefits," stated Andrea Jacobs , ComScore payments practice leader. "Low awareness, understanding of benefits and availability among retailers are among the key barriers to adoption of digital wallets," she said. "While these impediments may seem like a steep hill to climb, we have seen this story play out before in the financial services industry. There was a time when consumers were reluctant to use ATMs for similar reasons."

The current digital wallet landscape remains fragmented among providers because of low consumer adoption outside of PayPal, with only 12% of consumers claiming to have used a digital wallet other than PayPal. However, study results indicated that the digital wallet market opportunity could eventually reach 1 in 2 consumers as consumers become more aware of the offerings and educated on their benefits.

One clear barrier to use of digital wallets is that the concept is often difficult to convey and prone to misinterpretation. Even after being asked to review the web sites of particular digital wallets, respondents across all wallet brands still scored an average of just 45% in terms of demonstrated level of understanding.

The study revealed that security remains a top consumer concern, but that a significant portion of consumers are not aware of security features inherent in digital wallet usage. While 93% of consumers would prefer to use a digital wallet that has to be unlocked before use, an average of just 57% of respondents across the brands studied realized – after having reviewed the digital wallet website – that this locking feature was available. Some digital wallet providers were more successful than others in communicating the availability of this feature, with 71% awareness among Lemon web site visitors versus 42% among LevelUp web site visitors. The ability to improve communications of features addressing consumer concerns, such as security, could remove an important hurdle to adoption, ComScore noted. 


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Social media does not replace brick-and-mortar retailers, study finds

BY Alaric DeArment

NEW YORK — Despite nearly half of shoppers using social media every day, less than one-fifth shop through them, according to a new study by PwC.

The study, “Demystifying the Online Shopper: 10 Myths of Multichannel Retailing,” included a global survey of 11,000 shoppers in 11 countries, finding that of the 49% who use social media daily, 12% use them to shop, while 59% use them to follow, discover and provide feedback on brands and retailers. Overall, the study found, digital technology has changed the ways companies and consumers interact, but social media are not replacing the in-store experience. Forty-five percent of consumers continue to shop in brick-and-mortar stores, indicating that social media are not a major driver of traffic to online stores.

“Retailers should have realistic expectations when it comes to channels and devices, as shopping trends may not change drastically, and social media and tablets are likely not taking over any time soon, according to our survey respondents,” PwC U.S. retail and consumer sector leader Susan McPartlin said. “While many forecasts point toward devices and social media dominating in retail, companies today need to utilize their multiple channels to engage with consumers and use social media as a marketing and communication tool to create value. Our report finds that the physical store remains the centerpiece of the purchase journey, while devices are used significantly for product research and deals.”

The “myths” listed in the report were:

* Social media will soon become an indispensable retail channel. Instead, the report finds, social media aren’t likely to become an important retail channel anytime soon and are currently a driver for more shopping across all channels.

* Stores will mainly become showrooms. The physical store remains the centerpiece of the purchase journey, the report found.

* The tablet will overtake the PC as the preferred online shopping device. The report found that tablets and smartphones are typically used in the store while shopping, i.e. at the end of the purchase journey.

* As the world gets smaller, global consumers are becoming more similar. Retailers still need to cater to local trends and account for differences in consumer behavior.

* China is the future model for online retail. While China is at the forefront of some key trends, its multichannel and online model is unique to the culture.

* Domestic retailers will always enjoy a “home field” advantage over global retailers. In fact, the report found, foreign retailers are making inroads into consumers’ lists of favorite multichannel retailers, but still must keep in mind that they compete with local and global retailers alike.

* Global online pure players will always enjoy a scale advantage over their domestic counterparts. Many domestic online pure players are holding their own as they have better access to local market knowledge, the report found.

* Retailers are inherently better positioned than brands because they’re closest to consumers. Consumers are shopping directly from manufacturers and many no longer distinguish between retailers and their favorite brands, according to the report.

* Online retail is cannibalizing sales in other channels. Consumers were found to spend more with their favorite multichannel retailers, as opposed to just shifting some purchases to other channels.

* Low price is the main driver of customer spend at favorite retailers. Customers, the report found, value quality and innovative brands over price when shopping at their favorite multichannel retailers.

“A multichannel retail strategy can be extremely advantageous,” PwC retail and consumer sector advisory leader Lisa Feigen Dugal said. “The more minutely retailers can identify how consumers are utilizing the different channels, the more success they will have.”

 

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