While consumers increasingly turned to online shopping in 2020, one category that continues to be the domain of retailers is large appliances. 68 percent of the consumers buying major home appliances did so at a retail store — much higher than other retail categories.
In the case of Costco, the sixth largest retailer in the world with 100 million club memberships showed significant growth in large appliance sales over last year but wins only two percent of the total home appliance market. TraQline’s data has Costco coming in at number seven on the top 10 list of major appliance retailers.
Costco’s 2 percent market share in the major home appliance category compares to market leader Lowe’s, which holds a commanding 26 percent market share, followed by Home Depot (21 percent) and Best Buy (12 percent). Among Costco club members, its market share for home appliances lifts to almost 6 percent.
Costco is a retail giant by any measure. With 803 locations in the US, Canada, Mexico, and nine other countries, it employs more than 273,000 employees. In the fiscal year ending August 30, 2020, Costco reported net sales of $163 billion with a gross margin of 11.2 percent and net income of $4 billion, a 9 percent increase over 2019.
Despite the pandemic, Costco’s comparable sales were up 8 percent year over year in the US and 9 percent overall while gross margin percentages increased 18 basis points.
What Buyers Are Getting from Costco (And How They Are Buying)
Washers, dryers, and refrigerators make up the bulk of major appliance purchases at Costco. Here are the top Major Appliance brands at Costco:
- Samsung: 29 percent of sales
- LG: 28 percent of sales
- Whirlpool: 19 percent of sales
Compared to Costco’s top performers, the leading industry brands are GE (17 percent), Samsung (17 percent), and Whirlpool (16 percent).
While the majority of major appliance market sales for all retailers happen on the sales floor, Costco customers are more likely to begin their search online. On average, 62 percent of consumers shop online for appliances but for Costco 81 percent of shoppers go online before buying.
When it comes to making a purchase online, Costco flips the typical sales pattern. The industry average for online purchasing of a major appliance is at 28 percent. Compare that to the 64 percent of Costco shoppers that report the purchase of a major appliance online.
Another place where Costco exceeds the marketplace is in average sales price. With an average sales price of $1022 for a major home appliance, Costco has one of the highest average prices paid for home appliances (compared to the industry average of $850). That’s fueled in part by the fact that the prices for major appliances at Costco tend to fall into higher price ranges ($600+) with the largest percentage coming in at $1100 and above.
Who’s Buying from Costco?
Costco buyers have a fairly unique position in the marketplace. Half of all Costco home appliance buyers live in the West. Costco shoppers also tend to be in higher income brackets, although the mix of income brackets for shoppers at Costco is comparable to shoppers at Best Buy.
Costco makes a substantial amount of revenue from its membership program, surpassing 100 million members worldwide in 2020 according to the company’s August 2020 Annual Report. Second only to Amazon Prime in terms of the percentage of respondents that have a membership, Costco earned $35.4 billion in membership revenue in 2020.
Why Shoppers are Buying Major Appliances at Costco
While features and price are the top reasons shoppers choose the major appliances they buy at Costco, they also place significantly more importance on guarantees/warranties and recommendations than the industry average.
In the broader appliance market, competitive pricing is the top reason buyers cite as the reason for their choice of retailer. 60 percent of purchasers mention price as a reason for retailer selection.
Costco buyers are also more likely to make their purchase because they wanted a new one, not because an appliance had broken beyond repair. That’s a significant difference from the total market where 61 percent of consumers bought a major appliance after an old one was broken and either required repairs or was beyond repair.
TraQline: Your Market Research Data Provider
TraQline is the most trusted source for market insights and consumer data in the US and Canada, including trending about Costco market share information. In the appliance category, all of the top 10 leading brands trust TraQline for their market research data using our suite of market research products including Durable IQ, SKU Metrix, and HPOS.
We measure the entire retail market — online, brick & mortar, brands, and outlets — to give you a comprehensive market view. TraQline also offers advanced insight into major appliance industry trends and performance tracking with our Hybrid POS™ system—which is trailblazing past traditional POS systems. You can access in-depth product and feature comparisons at the SKU level with TraQline SKU Mextrix™. If you are ready to unlock the major appliance industry data your business needs to track competitive share and execute your strategy, contact our experts today.