Most of us don’t think twice about how much it costs us to go out and run a few errands on a Saturday afternoon. We really just focus on checking items off our to do lists and getting the job done, whether its heading to Target (TGT) – Get Target Corporation Report to pick up toilet paper or swinging by the local Petco (WOOF) – Get Petco Health and Wellness Company Inc Class A Report to restock on dog food.
But the soaring costs of fuel have given some Americans pause lately. While gas costs are not as high as they were a few weeks ago, they’re still higher than we’re used to paying, and no one likes that. Why leave the house to do your errands when you can pay someone to deliver your groceries instead — at a lesser cost than filling up your tank?
That state of mind is clearly spreading, as a recent report from Placer reveals that foot traffic to retail stores is significantly down right now. And for the first time in a long time, it’s not because of a Covid wave. With the pressures of inflation bearing down in multiple sectors, including food, gas, and housing, it’s no surprise that people are seeking alternative ways of buying the things they need.
What’s Hurting Most Retailers Will Help Costco
The drop in retail visits will be painful for most companies’ bottom line (unless customers spend more per visit), but for Costco (COST) – Get Costco Wholesale Corporation Report, it’s quite the opposite.
That’s because of all the things its known for, from cheap hot dogs to delicious slabs of giant salmon, Costco’s name has been associated with one thing over all others: Low gas prices.
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As fuel costs started to soar when Russia invaded the Ukraine, Americans balked as they saw how much more driving was costing them. Many realized there was one place to get gas at a significantly lower cost and lined up at their local Costco.
But since Costco is a membership-driven business, those who wanted access to the retailer’s cheaper gas that weren’t already members had to pay the cost, lining Costco’s pockets even further.
And at $60 per person for a yearly membership, you can bet those profits are soaring right about now. And considering that Costco is already sitting on a healthy amount of cash, which Costco Chief Financial Officer Richard Galanti said the company would “figure out what to do with” in its latest earnings call, the situation is only sharpening its edge.
As of March 30, Costco’s average in my local area is $3.65 for regular and $4.05 for premium, which is quite a bit lower than today’s national average of $4.23 for regular, so it’s easy to see why folks continue to flock to it.
The one downfall of getting the savings at Costco is how long it takes to actually fill up. Customers have taken to social media to share how long it can take to get your turn at the pump, some saying they’ve waited hours.
Is it worth it to spend the extra time and save money in the end? Only you can answer that, but a whole lot of other people sure seem to think so.