Retail

Costco Named Best Specialty Retailer

Douglas A. McIntyre

Published: February 25, 2016 6:42 am

Last Updated: January 13, 2020 12:45 pm

In the new American Customer Satisfaction Index (ACSI) study about retailers, most of the attention went to big-box stores and e-commerce companies. Buried in the research was the section about “specialty retail stores,” a category in which Costco Wholesale Corp. (NASDAQ: COST) had the best score.

Costco is admired for its sharp expense management, store locations and a model that includes membership fees as a means to supplement revenue. While many brick-and-mortar retailers have struggled, Costco’s revenue has risen from $77.9 billion in 2010 to $116.2 billion in its most recent fiscal year. Net income has risen from $1.3 billion to $2.4 billion over the same period. Unlike some other retailers that have over 1,000 locations, and in some cases a multiple of that, Costco has just 482 stores in the United States and Puerto Rico.

Costco received a score of 77 out of 100 in the new ACSI retail survey. Abercrombie & Fitch Co. (NYSE: ANF) was at the bottom. The authors of the study wrote:

Customer satisfaction with specialty retail stores declines 2.5% to an ACSI score of 77. Despite the drop, overall satisfaction remains higher than pre-recovery levels. Costco maintains its perch at the top with a score of 81, joined by L Brands, which saw year-over-year sales climb 8% at stores such as Victoria’s Secret and Bath & Body Works. Costco competitors BJ’s Wholesale Club and Sam’s Club are significantly behind, each scoring 76. Barnes & Noble makes the top three with an ACSI score of 79, above average for the industry, but well behind its largest competitor, the online juggernaut Amazon (83).

Based on the history of the study’s data, the Costco results are not a fluke.

Methodology: The ACSI uses data from interviews with roughly 70,000 customers annually as inputs to an econometric model for analyzing customer satisfaction with more than 300 companies in 43 industries and 10 economic sectors, including various services of federal and local government agencies.