As two of the most widely known grocery store chains in the US, the Walmart vs Costco debate is a common source of contention. While they are two very different retailers, Costco and Walmart are direct competitors, and determining a clear winner can be tough.
After all, there are times where the Costco stock outperformed Walmart’s, but since Walmart is the older company that’s been around since 1962, they tend to have more brand recognition, especially since they are present in many different countries under a different name.
So, which is the better retailer?
This isn’t a question that you can answer quickly. There are many things to consider when comparing Walmart vs Costco, which is why we’ve written this comparison.
We considered a lot of factors such as stock, revenue, business model, and even how the two retailers treat their employees when writing this article, making sure to give you a complete and transparent view of both companies.
If you’re trying to figure out if Costco is better than Walmart, you’ve come to the right place.
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Costco vs Walmart: Stock & Company Size
It was big news in 2019 when Costco stock beat out Amazon and Walmart. At the time, analysts were wondering if this signaled that Costco would eventually be the top retailer in the market. However, the stock market is subject to a lot of change, and the picture may be a bit different the more time passes.
In August of 2021, Costco reported a 16.2% year-to-year rise in revenue. On Wall Street, many people are pointing to Costco as a “good buy” with a lot of investors feeling bullish about the company.
However, in the same time frame, Walmart reported a 14% year-over-year rise, with their total revenue up 2.4%. Walmart is a bigger company than Costco, and that is probably because they have been around for a longer time and dominate a large share of the market.
However, Costco has been on the rise in recent years, which is expected from a company that’s slowly but steadily growing. And with over 113 million cardholders in the United States alone, there are signs that the Costco franchise will be growing even more. But for the time being, many investors still say that Walmart may still be the better investment for most investors.
While the stock of Costco shows that it may start competing with Walmart sometime in the near future, the company size paints a different story. Currently, Walmart has over 11,000 different locations across over 27 countries around the world. Since Walmart has been around since the 1960s, it has had much more time to grow as a company.
Walmart operates a lot of retailers and warehouses, with Sam’s Club being one of the most noticeable. The company was originally publicly traded in 1997 and is considered a safe investment by many investors.
On the flip side, Costco has been around since the 70s, making it significantly younger than Walmart. On top of that, up until 1983, the company was known as Price Club, so it took a while before it became the Costco we know today.
Currently, Costco has over 800 locations, and while unknown to a lot of people, they have locations in over 13 different countries including the United Kingdom, Canada, and Japan.
Costco runs on a different business model than Walmart, so while they compete against each other as retailers, a closer Costco competitor would be Sam’s Club, which is also owned by Walmart.
So, at this point, Walmart is still the larger company. While that doesn’t exactly determine who has the better products, prices, and services, it does paint a picture of how large and far-reaching both of the companies are.
Costco vs Walmart: Prices
When doing your shopping, a lot of customers take into consideration the prices at the retailers that they shop at. Another thing people consider between the two retailers is Walmart’s and Costco’s price match policies, which are additional ways people can save money.
But, how do Costco and Walmart compare in terms of price? Let’s take a look.
Determining which store has the cheaper products can be difficult, considering different locations may have different prices. On top of that, prices at both Costco and Walmart are subject to regular change, so products that may be cheaper at one store one day might be the same price or more expensive the next.
However, according to one price comparison online, it appears that Costco has cheaper prices than Walmart. This might be expected since Costco’s members-only business model is built on the premise of lower prices, but you might actually be surprised by how small the price differences can be.
One important consideration is how much of a certain product you’re buying. For a lot of the products on their shelves, Costco offers significantly lower prices per pound or ounce. However, since you have to buy in bulk for a lot of the products that can be found on the shelves at Costco, there’s a chance that you might actually lose money.
But, how can that be?
For example, let’s say you bought 10 pounds of frozen fries at Costco and forget to store them properly. While you paid a lower price per pound of fries, since the majority of the bag went bad because of poor storage, you end up paying more for less.
Compare that to buying a smaller bag of fries at Walmart for a higher price per pound but being able to eat and enjoy every single fry in the bag.
So, before you decide to pay for a Costco membership because of cheaper prices, make sure to consider how much of a certain product you’re buying. And if you do decide that it will be more economical and affordable in the long run for you to buy in bulk, make sure that you store everything properly to avoid any unwanted wastage.
Costco vs Walmart: Business Model
Costco and Walmart operate in fairly different ways. Walmart is considered more of a classic retailer that is publicly traded and family-owned. Walmart works around a concept known as brick-and-mortar retail which is the traditional model for retail stores.
In this business model, customers physically browse through the store’s shelves and products, choose items that they need and want, then proceed to the cashier for checkout.
While Walmart has some modern advancements like self-checkout lanes, its business model has remained relatively unchanged since the 1960s. With that said, Walmart has slowly been carving out its own piece of the e-commerce market, which has been booming in recent years with the growth and advancement of the internet.
And how is Costco different?
Well, Costco operates on a completely different business model than Walmart. Costco’s business model is designed to generate high sales volumes and rapid inventory turnover. So, Costco aims to sell more products and empty its shelves. So, instead of earning a lot for every item sold, they earn a little bit per product but sell items in bulk to encourage rapid turnover.
You can easily see this in the way Costco prices are set up. As mentioned before, if you compare Costco and Walmart prices, Costco’s per pound prices are significantly cheaper than Walmart’s. However, Costco makes up for this discrepancy by forcing customers to buy in bulk, which is how they offer low prices for their products.
On top of that, Costco is a members-only warehouse. So, to be able to access these cheaper prices, customers have to pay a membership fee and avail of a membership card.
Does Costco Offer Better Products Than Walmart?
While Costco warehouses might seem big, you might be surprised to learn that they only carry around 4,000 different products. Compare that to Walmart, which reportedly has around 142,000 different items in every store. So, when it comes to variety and quantity, you have more product choices in Walmart compared to Costco.
But how about the quality of the products?
Well, when it comes to quality, it all boils down to your own taste and preferences. The more important thing to consider when choosing between Costco and Walmart is the number of your grocery trips. Try asking yourself who you’re buying groceries for, as that plays a big role in determining which retailer to shop from.
For example, if you’re shopping for a large family or multiple people, you might have a better time with Costco products. Costco products are designed for bulk sales, so that means you can buy larger quantities at discounted prices. So, if you buy in bulk regularly, you could potentially save some money shopping at Costco, especially since they have a fairly varied range of products.
However, if you’re picky about the brands you want to consume, you might have better luck with Walmart’s variety. On top of that, while Walmart may be more expensive than Costco, keep in mind that you can buy smaller quantities at Walmart, which might make it the ideal store for people shopping for smaller quantities.
Both of these retailers also have food courts within their stores. However, Walmart’s choices are known to be more varied than Costco’s, but both retailers offer hot meals and decent food at relatively low prices.
Costco vs Walmart: Exclusive Brands
In this day and age, having a private and exclusive selection of brands is almost a must for a big-name retailer. So, both Costco and Walmart have their own range of exclusive brands that might be attractive to certain customers.
However, Walmart has more brands than Costco. At Walmart, you can find brands such as Sam’s Choice, Equate, Marketside, Mainstay, and Parent’s Choice, just to name a few. Each of these brands is known for higher quality products and has a relatively good reputation among shoppers.
Costco, on the other hand, only has one signature brand: Kirkland. With that said, Kirkland does manufacture a variety of products such as shampoos, alcoholic beverages, conditioners, food products, and more.
Costco vs Walmart Services
Both stores offer a variety of services that make shopping more convenient for customers.
For example, both stores have an auto center, where you can buy car parts and even have basic services performed. However, some Walmart stores have full garages attached to their Auto Center that offers a wider range of services such as oil and tire changes.
Costco battles this by partnering up with other garages and shops so if customers show their Costco membership card, they can get a discount at certain shops. Some gas stations have even partnered up with Costco, offering discounted prices for members.
With that said, both retailers offer banking, home improvement, and other services in their stores, which makes for a more convenient shopping experience.
Walmart Return Policy vs Costco Return Policy
Walmart has a pretty generous 90-day return policy. With this policy, customers can return most of the products at Walmart within 90 days of the original purchase. On top of that, if you don’t have the receipt, you can still return the item and receive store credit instead of cash or a reimbursement.
As for Costco, they have quite a similar policy, which is 90 days from the day of purchase for most items. Refunds without a receipt at Costco work the same way – you can do them as your purchase history is recorded on your account.
If you want to return an item after 90 days, if eligible, rather than getting your money back to the original payment, you will get a Costco cash card with the full amount of your purchase.
Costco vs Walmart: Employee Wages
In terms of how ethical their workplace practices are, Costco is the winner in this comparison. Walmart pays its employees a base wage of $11 an hour. While this is higher than the federal minimum, it is still a fairly small amount to get by on, especially for people supporting a family.
While Walmart claims that they will bump up their minimum pay to $15 an hour, that hasn’t happened yet. On the other hand, Costco prides itself on a $16 an hour wage and an employee’s union to protect their rights.
On the downside, there is no Costco employee discount.
Conclusion – Is Costco Better Than Walmart?
Both Costco and Walmart offer different customer experiences and benefits. With Costco, you might save money if you plan on buying in bulk, despite them having a smaller range of products and being a smaller company.
On the other hand, while Walmart products might be more expensive, their products are more varied, and if you don’t plan on buying in bulk, you could even save money by choosing to shop at Walmart instead.
At the end of the day, who the better retailer is depends on your needs and preferences. So, once you figure out which retailer offers the best products and services for you, it will be much easier to decide which one to go to for your weekly groceries.