Costco Wholesale Corporation (COST), Whole Foods Market, Inc. (WFM): The New Age of Supermarkets

Does Bulk Equal More Value?

At Costco Wholesale Corporation (NASDAQ:COST) it seems as though everyone loves bulk, brand names, and bargains. The success of Costco is no surprise; during the recession people wanted to save, and Costco Wholesale Corporation (NASDAQ:COST) provided those savings. Jeffrey Long, Costco’s senior vice president and general manager for the northeast region, attributes their growth during the recession to, “The value. When times are tough, people really start paying attention to what they’re getting.” The quality of product at Costco is consistently high; Kirkland brand provides bargains while name brands are available at a discount for the bulk purchases. In addition, Costco limits the number of products they shelve; they conduct extensive consumer research and only have the best brand name deals available. Costco Wholesale Corporation (NASDAQ:COST) has an 86% membership retention rate, with membership fees alone drawing in over $386 million dollars. With a strong product, and high retention rates, Costco is a buy.

Conclusion

Traditional supermarkets have stagnated against the innovative business models of Costco and Whole Foods Market, Inc. (NASDAQ:WFM). Both are strong buys with customer loyalty and consistent growth during the recession. It will certainly be exciting to watch the success of both as America’s economy expands once again.

The article The New Age of Supermarkets originally appeared on Fool.com and is written by Rob Byrnes.

Rob Byrnes has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale (NASDAQ:COST) and Whole Foods Market (NASDAQ:WFM). The Motley Fool owns shares of Costco Wholesale and Whole Foods Market. Rob is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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