We compared Sam's Club vs. Costco foot traffic to see which of these big box brands performs best. One dominates the west, the other owns mid-America. In the east, the fight is on. Which can draw more 2023 foot traffic in major markets and smaller towns, and where will they go next?
Sam’s Club vs Costco is largely a regional tale with limited, though significant skirmishes in both larger and smaller markets, depending on the strategic territorial lines each brand wants to defend and expand.
Costco owns the west and penetrates significant markets in the Great Lakes area and northeastern U.S., including New York. Sam’s is middle America’s brand of choice; that narrative continues through most of the south.
With appeal to a range of consumer profiles, both big box brands’ plans for growth must revolve around their unique site location strategies. In each case, Sam’s and Costco will need to adapt to continue their growth. But how and where?
To find out, we looked at visitation data from Q1 of 2021 and 2022 for each brand, with the objective of learning what to expect in Q1 of 2023 and beyond.
Overview
While Costco locations own total national foot traffic ~5:4, and the brand tends to thrive around large, urban markets, Sam’s Club excels in targeting cities with catchment areas below the threshold Costco normally invests in (call it <500k). Once you centralize on a median population mark of ~1 million, rugged competition between the two brands kicks-in.
A quick look at the map will tell you that Costco is strong in the west and in the big state markets of New York and Illinois. By contrast, Sam’s Club dominates the center and south of the U.S., as well as parts of the Great Lakes region.
Let’s zoom in now to examine how the two brands compete in overlapping markets, and what the data says about how each may grow their presence in 2023 and beyond. We’ll start with a look at some key battlegrounds.
Battlegrounds
There’s good battles throughout the map but we’ll focus on the southeast and the Great Lakes region where the broader war for foot traffic coalesces in heated competition.
In Florida, Sam’s Club wins the state market for total foot traffic by a factor of ~3:2, despite losing densely populated Miami-Dade, Palm Beach and Broward counties by as much as 4:1. Why? Because once population centers and catchment areas drop below the magic number, either Costco gets disinterested in the market, or the consumer gets disinterested in their brand. We see this in several mid-sized Florida counties and cities where Sam’s wins, including Duval (Jacksonville), Hillsborough (Tampa), and Orange County (Orlando).
In Georgia, Sam’s wins total visitation by ~3:2, but with a different pattern than in Florida. The state’s largest markets are split, with Costco winning Cobb County (Marietta) and Fulton County (Atlanta), and Sam’s claiming Dekalb (Atlanta-area) and pulling within 10% of Costco in the all important Gwinnett County market, also in the Atlanta area. Costco is suspiciously absent in Henry County which seems to match their state and national site location profile.
In the Great Lakes area, Costco squeaks out wins in Minnesota (54%), Wisconsin (59%) and Illinois (52%), while Sam’s comes out on top in Michigan (54%) and Ohio (61%). There are a lot of mid-sized cities in this region that often determine the state winners, including Minneapolis, Detroit and Columbus, OH.
It’s not often considered a Great Lakes state, though it borders two of them, but New York is also Costco country. Costco has locations in Kings and Queens that Sam’s is not interested in competing with. Costco is also uncontested in busy Nassau County (Long Island) and in smaller markets one might expect to see Sam’s launch a challenge, including Onondaga County (Syracuse).
Site selection interpretations
While Sam’s Club specializes in smaller markets and Costco likes big ones, the two brands meet in the middle to compete for a number of mid-sized cities and markets. On the surface, there appear to be gaps in the marketplace each brand may be compelled to fill in 2023.
Costco may reexamine the lower boundary of its catchment area threshold in order to find new and developing mid-sized markets in the central and east of the country. Dayton OH, the Hudson Valley area outside NYC, and York County near the center of Pennsylvania all jump out.
Sam’s Club may need to play defense in some of these same areas, and may look to open new sites of its own in more markets where Costco is simply going to choose not to play. If Sam’s goes the route of lowering their own catchment area threshold, this could include a number of smaller cities (think <100k population) not currently served by either brand.
If you’d like to see county and city level views of this, or any of our other brand performance index posts, please contact one of our friendly location intelligence experts today.
