Durian at a Costco Wholesale location in Woodland Hills, California. April 24, 2022.
Wendy Leung
Wendy Leung rarely saw them take to grocery stores growing up in Los Angeles, but the 45-year-old nonprofit found the fruit at her local Costco Wholesale in San Fernando Valley this April. Durian is used in Southeast Asian cuisines and is known for its strong odor.
“When I saw it at Costco, it made me laugh that the durian has become current,” said Leung, who was born in Hong Kong. “I’ve definitely noticed more Asian products at Costco lately.”
Asian Americans are the fastest growing population group in the United States. They are also a disproportionate number of Costco customers. Asians make up about 7 percent of the U.S. population, but they make up 11.9 percent of Costco’s buyers, according to market research firm Numerator.
Costco’s dominance among Asian Asian consumers bodes well for the warehouse retailer’s long-term growth trajectory, and has implications for other retailers as the industry evolves alongside a diversification of states. United.
“There’s an opportunity to take advantage of what were once considered niche or minority markets and put them at the center of U.S. trends,” said Kymberly Graham, head of intelligence initiatives at the intelligence firm. from the consumer NielsenIQ.
“For Asian-Americans, their rate of population acceleration certainly supports this idea that … they will create big market changes. If their needs are met, it becomes inherently very profitable for anyone who serve, ”Graham said. dit.
A $ 13 billion opportunity
The rapid growth and purchasing power of Asian Americans make the group a formidable consumer base for retailers. The Asian population in the US increased by 81% from 2000 to 2019, compared to the 16% growth in the general population, according to the Pew Research Center. Asian Americans have the highest average family income in the U.S., although the demographic group also has the largest intragroup economic disparity in the country.
According to NielsenIQ, the untapped sales potential of Asian-American consumers reaches $ 13 billion.
On average, Asian Americans have some shopping habits that differ from other consumers, NielsenIQ found. Households of Asian descent are usually more numerous than those of the total U.S. population. Asian-Americans are more likely to buy in bulk and look for deals. As a result, Asian consumers are more than twice as likely to buy from store clubs as the average U.S. consumer.
Costco declined to comment directly on consumer inventory and strategy with regard to Asian buyers. “Regardless of the products we sell, Costco’s purchasing philosophy is the same: research the market, determine the variety of products our members are interested in, and negotiate exceptional value in quality products and services,” said management. from Costco to CNBC in an email.
The store’s retailer doesn’t spend money on advertising, but word of mouth can cultivate brand affinity between different communities, said Marshal Cohen, chief industry analyst at market research firm NPD Group.
“From time to time on a very blue moon you would hear about a major retailer focused on the Asian community,” Cohen said. “Word of mouth and community influence is spreading, and that’s what helps elevate a business. So if a business like Costco caters to the Asian community, they share it and that multiplies.”
Cindy Zhou, 50, first learned about Costco from a friend who is also an immigrant from China. Zhou became a member of Costco around 2013 and now buys food, household goods and gas weekly from his local department store in Greater Cleveland.
“Almost all of my friends have members of Costco,” said Zhou, who works in information technology. “I like Costco because they have really good quality at a much lower price than other grocery stores.”
Zhou and other Costco shoppers noted that their local stores have added specialty Asian items such as boba ice cream sticks, lap cheong, and oyster sauce to their rotating inventory in recent years. He recalled seeing exhibitions for the Chinese holidays, the Mid-Autumn Festival and the Lunar New Year at Costco last year. Leung’s store in California sells poke bowls.
Asian-American consumers can find food products from their diaspora at local ethnic grocery stores and Asian supermarket chains such as H Mart, 99 Ranch Market and Patel Brothers. But seeing these products at one of the largest retailers in the world is rare.
With a market value of $ 185 billion, Costco had total revenue of $ 195.9 billion in 2021, up 17% from the previous year. The company plans to report its latest results after the market closes on Thursday. Its shares have fallen more than 20% so far this year.
Zhou said that when she or a friend see an Asian product on Costco that they would normally only see in an ethnic store, they tell others in group chats on the Chinese messaging app WeChat.
“Costco’s Love”
Jing Gao, founder of the hot sauce brand Fly By Jing, is a big fan of Costco as a consumer, so when he had the opportunity to introduce them to Costco buyers, he took the opportunity.
“I’m obsessed with Costco. I go for every chance I get,” Gao said. “There’s something fantastic about the discovery … not knowing what deals you’ll find.”
Fly By Jing at Costco Wholesale
Fly through Jing
Fly By Jing started as a direct online consumer business only before expanding to retailers such as Whole Foods, Target and now Costco. The brand launched its crunchy Sichuan Chili product at Costco stores in the Los Angeles and Hawaii region in February. A few months later, Fly By Jing has already expanded or is in the process of entering the markets of the Northeast, the Bay Area, the Pacific Northwest, San Diego and Texas. The company also plans to launch its Zhong dough ball sauce at Costco, starting in LA later this year.
An Instagram video announcing the launch of Costco has become the highest-performing post by Fly By Jing on the social media platform. The video currently has approximately 85,000 views, almost 7,000 likes, and nearly 600 comments.
“Clearly there’s a lot of love for Costco,” Gao said.
One customer who bought Fly By Jing from Costco is Leung.
“I would congratulate Costco for thinking about what young people want, what’s there,” Leung said. “Start developing a loyalty.”