When it comes to big-box retailers, Walmart and Costco are two of the biggest names in the game.
While both offer discounted prices on a wide range of products, they each have their own unique business models and approaches to customer service. So, I decided to take a closer look at Walmart vs Costco, examining everything from their product offerings to their financial performance.
Firstly, I’ll provide a brief company profile and then take a closer look at the financial performance of each company, including total revenues and stock performance. Then we’ll explore the prices and products sold at each store. I’ll also look at the services offered by each retailer, and evaluate their respective customer service experiences, including the availability of knowledgeable staff and ease of returns.
I’ll let you make up your own mind…
By the end of this article, readers will have a better understanding of the similarities and differences between Walmart and Costco, allowing them to make more informed decisions about where to shop for their household needs.
So, let’s get started with the…
Walmart was founded by Sam Walton in 1962, and is an American multinational retail corporation operating a chain of hypermarkets, discount department stores, as well as grocery stores.
The company is headquartered in Bentonville, Arkansas, and operates more than 11,000 stores in 27 countries, under various banners, including Walmart, Sam’s Club, and Asda. Walmart is the world’s largest company by revenue, and as of 2021, it employs more than 2.3 million people worldwide.
Costco, on the other hand, was founded in 1983 by James Sinegal and Jeffrey Brotman in Seattle, Washington. The company operates a chain of membership-only warehouse clubs and is known for its bulk sales and discounted prices.
Costco has expanded rapidly in recent years and now operates more than 800 stores in 12 countries, with the majority located in the United States and Canada. The company has its headquarters in Issaquah, Washington, and employs more than 250,000 people worldwide.
Going head to head…
Both Walmart and Costco have had significant impacts on the retail industry, with Walmart pioneering the concept of everyday low prices and Costco revolutionizing the wholesale shopping experience.
Despite their different business models, both companies have remained competitive in the ever-evolving retail landscape, with Walmart focusing on expanding its online presence and investing in emerging technologies, while Costco continues to grow its membership base and offer unique product lines.
In terms of global revenue, Walmart has substantially higher sales. In 2022, Walmart’s global revenue was a staggering $611 billion, up from $573 billion in 2021. Costco, on the other hand, had a global revenue of $227 billion in 2022, up from $195 billion in 2021. While Costco’s revenue has steadily grown over the last five years, Walmart’s revenue remains significantly higher.
On these revenues, Walmart made a pre-tax profit of just over $17 billion, whilst Costco pulled in an impressive $8 billion. Despite earning revenues three times higher than Costco, Walmart only makes just over twice the profit of their rival.
Ups and downs in the market…
When it comes to stock market performance, both companies have seen their fair share of ups and downs. In March 2018, Walmart’s stock price was around $87 per share. By December 2020, it had risen to around $153 per share. Since then, it has been fluctuating from as low as $120 up to $150 and currently stands at $141 per share. That represents a 62% increase in five years.
Costco, on the other hand, had a stock price of around $187 per share in March 2018. This steadily rose to a high of $577 per share by April 2022 and currently stands at $481 as of March 2023. That’s a 157% increase over five years, way outperforming the return on Walmart shares.
Both companies have their advantages…
So while Walmart remains the clear leader in terms of revenue, both companies have seen growth in their global revenue over the last five years, and Costco has the better profit margins. In terms of stock market performance, both companies have seen their share price increase over the last five years, but Costco is the significantly better-performing stock of the two.
When it comes to prices, Walmart and Costco have different approaches that appeal to different types of customers.
Walmart is known for its “everyday low prices” strategy rather than relying on sales or promotions to attract customers. This approach is designed to appeal to customers who are looking for lower prices on a wide range of products.
Walmart achieves this by using its vast network of suppliers and then passing those savings on to customers. The company also offers a price match guarantee, where it will match the price of a competitor’s product if it is found to be cheaper.
Costo is all about buying in bulk…
Costco, on the other hand, offers lower prices by selling products in bulk. The company negotiates lower prices with suppliers by purchasing products in large quantities and then passes those savings onto members.
Costco’s membership fee model allows it to offer products at lower prices, as the fee offsets the company’s operating costs. While some customers may be put off by the upfront cost of the membership fee, those who regularly shop at Costco will save a significant amount of money in the long run.
While Walmart and Costco are both retail giants, they do things differently when it comes to the products they sell in their stores.
Walmart sells a wide range of products, from groceries and clothing to electronics and home goods. The company’s stores are designed to be one-stop shops, where customers can find everything they need in one place. Walmart’s product selection appeals to customers who are looking for variety and convenience, as well as those who are on a tight budget.
The company offers a range of private label brands, as well as name-brand products, giving customers a variety of options at different price points.
Limited selection but great value for money…
In contrast, Costco offers a more limited selection of products but focuses on high-quality items sold in bulk. The company’s stores are designed to appeal to customers who are looking for value for money and are willing to buy products in larger quantities to save money in the long run.
Walmart and Costco offer different services to their customers, reflecting their distinct business models.
Walmart offers a range of services, such as a pharmacy, banking, opticians, photo printing, and online grocery delivery. The company’s focus on convenience means that it offers services that can save customers time and effort. For example, the company’s online grocery delivery service allows customers to have them delivered to their doorstep, making shopping less time-consuming.
In contrast, Costco’s services are more limited but still valuable. The company offers subcontracted services such as mortgage purchase, insurance, and auto buying programs to its members. These services are designed to appeal to customers who are looking to make big savings and are willing to pay a membership fee for access to these benefits.
Walmart has invested heavily in customer service over the years, aiming to create a positive shopping experience. The company offers in-store assistance, online chat support, and a customer service hotline. Walmart also has a flexible return policy, allowing customers to return products either in-store or online within 90 days. If you don’t have a receipt, you will be paid back in the form of store credit.
Costco’s approach to customer service is focused on its members. The company provides a dedicated customer service team that is available to assist with any questions or concerns they may have. They focus on a premium experience where employees are known for their friendly and helpful approach.
Return pretty much anything at any time!
The Costco returns policy is even more liberal than Walmart’s. You can quite literally return almost anything at any time, without any questions asked, even if you don’t have the receipt.
But who scores higher with the public? In a 2019 survey of 62,000 shoppers carried out by the American Customer Satisfaction Index, Costco scored 83/100, the highest score on their list. Walmart registered 74/100 with many customers citing unfriendly service and a lack of helpfulness from Walmart employees.
A good way of judging a company’s ethics is on how well they reimburse their staff. A casual look at the figures shows that working at Costco is a far more profitable venture for their employees.
The starting hourly rate at Costco is $16 per hour. That’s more than the average hourly rate of pay at Walmart, which is $15 per hour, with many of their employees making less. The average hourly rate at Costco is way higher at $24 per hour. That’s a surprisingly large pay gap that could really make all the difference between struggling to get by and a decent livable wage.
More Info About Your Local Superstores
If you’d like to learn more about your favorite stores, then find out more about the Biggest Walmart Competitors, as well as Is Dollar general Owned By Walmart, Does Walmart Own Dollar Tree, and Is Target Owned By Walmart?
Next, we move on to Costco! A few facts you might want to know include Does Costco Take Passport Photos, Does Costco Refill Propane Tanks, and Things To Know Before Buying Costco Cell Phones, followed by Things To Know Before Buying Costco Platters if you’re planning an event!
Final Thoughts on Walmart vs Costco
Walmart and Costco are two of the largest and most successful retailers in the world, with distinct business models and approaches to serving their customers.
Walmart is the larger of the two companies focusing on everyday shopping items at competitive prices. Their store accessibility and exhaustive product selection are their unique selling points.
Costco’s customer service is excellent!
Costco manages to keep its prices down by offering bulk buying discounts, which will appeal to large families or businesses. Whilst their product range isn’t as extensive, big savings can be made, and their customer service is second to none. They also pay their employees a wage they can live well on, which is a big plus in my book.
Which store you end up spending money at will depend on what you are shopping for and how much of it you need to buy. Many shoppers make use of both stores to satisfy their retail needs, and that is unlikely to change anytime soon.