Costco Target Market & Demographics (All You Need To Know)

Costco has established itself as the sixth most valuable retail brand in the world, owing greatly to a loyal customer base that continues shopping with the retailer year after year.

Given how successful Costco’s customers have helped it become, you may be wondering – what are Costco’s target market and demographics like? Here is what I’ve found out about this!

Costco Target Market And Demographics In 2021

Costco’s target market is middle to upper-income and educated customers such as those working in management, medicine, finance, law, IT, and government as of 2021. Costco’s market is not generally gender or ethnicity-specific, but it does target people who are aged 30 and above and have their own families.

If you want to learn more about Costco’s business strategy, how Costco retains the loyalty of its customers, and whether Costco’s target market is changing, keep on reading!

What Is Costco’s Business Strategy?

Costco provides value to its affluent customer base by offering the highest-quality items, competitive prices, and highly rewarding members-only services.

The business model is based on selling name-brand items at low costs and thin margins.

This way, customers tend to buy products in bulk which boosts profitability whilst high customer return rates ensure economic sustainability.

In addition, Costco warehouses only have 3,700 to 3,800 different items available for customers to choose from whereas Walmart supercenters stock 142,000 different products.

By choosing the quality of products over quantity, Costco occupies its own space in the market with less competition.

How Does Costco Attract Its Target Audience?

Costco sells only the best products on the market but always offers competitive prices.

The average retail markup at Costco is just 11%, so consumers know that they are getting a great deal on the name-brand items that they love.

Additionally, most Costco stores are found in affluent, suburban neighborhoods rather than poorer inner-city areas where members of the target market are less likely to be based.

What Are The Psychographics Of Costco’s Target Market?

Costco shoppers are typically confident personalities who are concerned with how others perceive them, i.e status and money are important to them.

These people love shopping and use it as a way to express their sense of self.

Costco caters to these needs by making the shopping experience fun and by offering a range of high-quality products that customers use to define their identity.

What Is The Average Income Of A Costco Customer?

According to a survey from Morgan Stanley, Costco members have an average annual income of $93,000.

This figure is significantly higher than customers at other chains such as Walmart, indicating that Costco’s target market consists mostly of middle- and upper-income class people.

What Is The Typical Age Of A Costco Customer?

Estimates from different data sets vary, but the consensus is that the average age of a Costco customer is between 40 and 50.

For example, Barrons reports that the average age of a Costco customer is 43, whereas data from Numerator suggests that the two most common age ranges are 35-44 and 65+.

What Are The Ethnicity Demographics Of Costco Customers?

What Are The Ethnicity Demographics Of Costco Customers?

According to data from Numerator, Asian people are most likely to shop at Costco.

This is followed by Hispanics and Caucasians, with African Americans less likely to shop at Costco.

Is Costco’s Target Market Changing?

Costco is making small changes to lower the age of its customer base and attract more millennials and members of Generation Z.

An increased social media presence, expansion of online services, and growth of organic products have all helped to make Costco more appealing to a younger market.

How Does Costco Retain Its Customers?

Costco provides an exciting customer experience that keeps people coming back. Its target market loves the feeling of getting their favorite, high-quality items at bargain prices.

Along with that, the layout of Costco stores also turns the mundane process of shopping into a fun journey.

Before reaching the basic amenities, customers have to pass by the more expensive, impulse buy items.

Additionally, free samples offered in the food court also have the effect of satisfying customers.

How Does Costco Reward Its Customers?

Costco offers an exclusive membership scheme to its customers, with features and rewards growing with the level (and fee) of the membership.

With a considerably high annual price of $60 for Gold Star membership and $120 for Gold Star Executive membership, Costco makes consumers feel as if they are part of a special club.

The membership provides savings for regular customers through coupons. The Gold Star Executive membership also provides customers with 2% cashback on their purchases.

Note that these schemes are very effective and contribute to a large chunk of Costco’s revenue.

Interestingly, the number of Costco members worldwide in 2020 exceeded 105 million, and the membership also had an impressive global renewal rate of 88%.

How Much Does The Average Person Spend At Costco?

According to the senior vice president of financial planning and investor relations at Costco, Bob Nelson, the average spend per visit at Costco is between $130 to $140.

This accounts for the total money spent at the store, gas station, and pharmacy in a single visit.

Data from Numerator puts this figure lower and suggests that the average basket spend at Costco is $91.22.

However, this is still higher than most other retailers, as Costco offers high-quality products and encourages its customers to buy in bulk.

Now that you know about Costco’s target market, you can also check our related posts on whether or not Costco is unionized, the best time to shop at Costco, and Costo’s competitive advantages.

Conclusion

Costco’s business model is based on the acquisition and retention of an affluent, middle-aged consumer with lots of disposable income.

According to a study from Numerator, Costco’s typical customer is a 39-year-old, degree-educated, married Asian American woman who earns more than $125,000 per year.

Costco also occupies a niche area of the market focusing on high-quality products at low-profit margins.

Less competition and great customer experience have helped Costco form a large and loyal following that is integral to the retailer’s success.

marques thomas query sprout

About the author

Marques Thomas graduated with an MBA in 2011. Since then, Marques has worked in the retail and consumer service industry as a manager, advisor, and marketer. Marques is also the head writer and founder of QuerySprout.com.

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