Costco & Lululemon

Placer ,  December 9, 2020

In this Placer Bytes, we dive into two retail giants from vastly different sectors, wholesale club king Costco and athleisure leader Lululemon.

Costco

Costco’s rebound should come as no surprise. Whether it be mission-driven shopping, economic uncertainty driving consumers to value, or the ability to stock-up ahead of potential closures, there are few trends that don’t align for the wholesale club giant. They’ve also seen a steady uptick in visits with July, August, and October showing year-over-year growth. While September did mark a 3.5% visit decline year over year, October was the strongest visit month for the brand since March with traffic to stores up 3.9%.

And these visit rates are not slowing down. As we noted in our holiday season expectations, wholesale clubs seemed uniquely suited to the current environment. Holidays like Thanksgiving and Christmas would drive visits, as would concerns over new shutdowns with rising case numbers, and there was already a growing push in their favor. Even more, wholesale clubs tend to see a strong pull to repeat visits because of their membership model.

As expected, these trends turned into visits. The weeks beginning October 26th and November 2nd saw visits up 4.3% and 2.7% year over year, in line with October numbers. But the weeks of November 9th and 16th saw visits surge 8.0% and 6.6% year over year, setting the brand up for a huge November. And while visits were down 14.1% the week of Thanksgiving, they also included a 2.2% increase in visit duration, a major jump considering the already extended nature of the average Costco visit. This indicates that shoppers are deepening their mission-driven shopping as COVID numbers rise in key regions for Costco.

Lululemon

Lululemon is one of the most exciting retail brands and is among the strongest performers in the highly competitive athleisure and activewear segments. It was also one of the strongest apparel performers in 2019 and the early part of 2020 with a major expansion plan driving huge visit growth. So, it should come as little surprise that the brand was on a clear and impressive path of recovery. Each month saw the year-over-year visit gap shrink with visits down 19.8%, 16.9%, and just 11.0% in August, September, and October respectively.

Yet, it does appear that wider concerns over a COVID resurgence and the impact that this fear is having on mall traffic is leaving consequences. Visits for the weeks beginning October 26th and November 2nd were down 29.3% and 22.0% respectively year over year. And while the weeks of November 9th and 16th were doing much better with visits down just 14.0% and 14.3% respectively, this was still far off the pace the brand had been setting in October.

Importantly, the trend shows something very important for Lululemon. Like many other retailers, these brands do very well when allowed to open and struggle when restrictions are in place. While this may sound obvious, it is important because it shows the ongoing and continued value their offline locations provide.

Should a vaccine truly be on the way and COVID shortly become a thing of the past, Lululemon’s visit data shows that they could be among the fastest to recover and even gain strength in the longer term. This is especially true considering the brand’s leadership among a retail segment that could actually be further strengthened by recent events.

To learn more about the data behind this article and what Placer has to offer, visit https://www.placer.ai/.