Costco's same-day grocery delivery sales rise 450%

Dive Brief:

Costco reported same-day grocery delivery sales rose 450% during Q2, showing continued high demand for online shopping through the club retailer during the pandemic.
CFO Richard Galanti said during the company’s earnings call that its curbside pickup test at three stores in New Mexico is going well with basket sizes that have “surpassed our expectations.”
Total company e-commerce sales rose 76% during Q2, excluding same-day grocery sales, and 96% when including them, Galanti noted.

Dive Insight:

High online grocery sales through the Instacart-powered program point to the strength of Costco’s assortment as well as ongoing demand for e-commerce. Although Costco is primarily focused on its store sales, shoppers are still clamoring to get bulk grocery items delivered.

The company’s pickup test, which was revealed in January, remains centered on three stores in Albuquerque, New Mexico, with no expansion plans yet announced. Galanti said Costco is determining how to most efficiently operate the service and whether or not it can be scaled up.

Grocery remains a primary trip driver for Costco, with fresh food sales rising more than 20% in the quarter, led by meat and deli. Average transaction size rose 11.9% company-wide and 8.5% in the U.S. as shoppers continue stocking up on the company’s treasure-hunt assortment. Membership income rose $65 million during Q2 to $881.5 million.

During the call, Galanti also noted Costco is fully embracing self-checkout, which is currently installed in 60% to 70% of the company’s U.S. stores, and will eventually be in "virtually all of them" as well as some international locations. The company eliminated self-checkouts from its stores in 2013 but began adding them back into stores two years ago.

“It’s working in our environment the way we want it to, and we see savings there,” Galanti said about self-checkout.

Costco's net sales for the quarter rose 14.7%, to $43.89 billion, and net income was $951 million and included $246 million in pretax COVID-19 costs, primarily worker wages. This month, Costco raised its starting hourly wage to $16.