The Costco Gas Station Experience You've Always Wanted Is Finally Here
Costco is finally building standalone gas stations to solve their infamous parking lot congestion while expanding member benefits beyond the warehouse. This economics 101 supply-and-demand solution could be the competitive edge Costco needs against Sam's Club and Walmart. Presented by A&M Consumer and Retail Group, Mirakl, Simbe, Infios, Clear Demand, and Ocampo Capital.
For the full episode, head here: https://youtu.be/vjOmUkH_Vhw?si=9f8KlsQw8yUdPqan
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Transcript
Costco is building its first standalone gas station.
Speaker A: , California in the spring of: Speaker A:The new site comes as Costco works to expand its gas station offerings to members who pay $65 to $130 per year to shop at the warehouse.
Speaker A:Giant cheaper gas on top of the 5% rewards that Costco gives credit card holders and is one of the top membership draws for Costco.
Speaker A:And standalone stations could help alleviate traffic at existing warehouses, which often face, and I can attest to this, snarled parking lots and long lines at the pump.
Speaker A:Brooks, are you pro or con?
Speaker A:The idea of Costco building standalone gas stations, both for the consumer and for Costco?
Speaker A:Both points of view, please.
Speaker B:Oh, this feels like the biggest no brainer today.
Speaker B:I mean, I'm a big.
Speaker C:Really Costco?
Speaker B:Yeah, this is a, this is a big no brainer.
Speaker B:I mean, look, add more hours, extend the hours, expand the footprint that you have.
Speaker B:But look, I think the next step here has to be standalone stations.
Speaker B:These are so popular today.
Speaker B:It's just a matter of simple economics.
Speaker B:This is supply and demand.
Speaker B:This is economics 101.
Speaker B:You've got all kinds of demand given the member pricing, the benefits that you described, Ann, but just not nearly enough supply.
Speaker B:I mean, this is, I can't think of a more loyal customer base for gas than what Costco has built.
Speaker B:Love the idea.
Speaker B:I also love the buck 50 hot dogs too.
Speaker B:So don't give that up.
Speaker A:We might have a lightning round question that you're going to have to answer to Brooks.
Speaker A:Bryson.
Speaker A:Bryson, what about you?
Speaker D:No, so I agree.
Speaker D:I think, I think this really does fall into no regret and I think, you know, it is a smart play.
Speaker D:I think the one element that I would add to it, and I think there's two kind of, you know, points of concern consideration here is one kind of the role of the, the fuel centers.
Speaker D:Right.
Speaker D:I think it is one that does drive traffic into the warehouse.
Speaker D:So, you know, they're going to have to compete with that in the sense of knowing that, you know, customers in this aspect are just coming in for the fuel.
Speaker D:We're not going to get the added benefit of the high margin basket items as they're going through the warehouse.
Speaker D:But conversely, I think too, you know, understanding the dynamics of the Costco shopper, they really engage with the warehouses 1.6 to 2 times in a given month.
Speaker D:So this now presents an opportunity to increase that traffic and engagement with the customers.
Speaker D:Improving enhancing Costco's, you know, top of mind mentality with those consumers.
Speaker D:So the frequency of engagement with the customer I think is also an incremental benefit that's going to be important for the members.
Speaker A:Absolutely.
Speaker A:Bryson.
Speaker A:I mean you think about just how many more people are more inclined to get a membership when gas, you know, which is for, for most people is even a weekly type thing that they need to do to be able to get these savings and then to have that in addition to, you know, their, their Costco club experience.
Speaker A:I think especially when you look at Sam's Club and Walmart who are also making a play in fuel here too and they're going to start having their, more of their independent stations.
Speaker A:You have to as Costco I think be, be going up against them and being prepared especially with a fuel strategy.
Speaker A:But Chris, close this out.
Speaker A:What are your thoughts here?
Speaker C:Yeah, I mean my thought, I 100% agree with everyone.
Speaker C:I think my thoughts are I wish I had Costco's problems, you know, at the end of the day like because I think when you layer this in, like Brooks said, with also the extension extending hours for, for their, you know, their most exact.
Speaker C:For their executive members.
Speaker C:I mean, yeah, this is also, this is also an operational, you know, idea.
Speaker C:You know, it goes back to my first year at business school with the technology and operations management class.
Speaker C:You want to smooth out your traffic flow and so that's why we're doing this.
Speaker C:This isn't the standard playbook from a retailer to build a standalone site that keeps people out of the store.
Speaker C:But what it does is it gets back to the subscription of why do people want to come to Costco?
Speaker C:And, and the one thing they want is gas discounts.
Speaker C:But the one thing they also don't want that they don't want, which is a reason not to buy the Costco membership is not being able to find a parking space when you go there and being just burdened by how many people are there.
Speaker C:So Yeah, I think NetNet is a great idea.
