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Costco ups options for customers

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ISSAQUAH, Wash. — Costco Wholesale Corp. has introduced new delivery services for its members.

Costco chief financial officer Richard Galanti said in a conference call earlier this month that the company’s brick-and-mortar business is “as strong as it’s ever been.”

But he added that the company is expanding its online offerings.

Costco has introduced a service called CostcoGrocery, free for orders of more than $75, that allows Costco members to choose from about 500 nonperishable grocery and other products, and have them delivered in two days via UPS. CostcoGrocery is available throughout the continental United States, according to the company.

“We’d expect to expand these offerings over time,” Galanti said of the service, which launched this month.

Costco has also expanded its same-day delivery of products, including perishable groceries, though Instacart.

The Instacart same-day delivery service, which covers about 1,700 items, is now available in most metropolitan areas and will be expanded to others during 2018, Galanti said.

Analysts responded positively to the news, arguing that it could position the warehouse club operator to compete better with Amazon.com and Walmart for the hearts and minds of younger and more convenience-minded shoppers.

Jefferies analyst Daniel Binder wrote in a note that the new services could drive increased engagement with Millennials.

“Provided they don’t simply cannibalize store sales, the stronger omnichannel effort could prove accretive to sales and EBIT dollars,” Binder wrote.

Gordon Haskett analyst Chuck Grom was also largely positive on Costco after a recent visit to the company’s headquarters. He noted that Costco remains in a position of tremendous strength with:

• Healthy traffic and same-store sales trends (6.2% core comp in ­September).

• The ability to proactively invest in both price and new online ­efforts.

• Some newfound religion on both personalization (leveraging its member data base) and digital strategies to help improve traffic (both online and off).

Costco has been deemed slow to move into the digital space. But the company does operate e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea and Taiwan.


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