Durian wholesale at Costco in Woodland Hills, California. April 24, 2022
Wendy Leung
Wendy Lyng rarely saw durian in grocery stores growing up in Los Angeles, but the 45-year-old nonprofit found the fruit at her local Costco wholesale store in the San Fernando Valley this April. Durian is used in the cuisines of Southeast Asia and is known for its strong aroma.
“When I saw him at Costco, he just made me laugh that durian has become mainstream,” said Hong Kong-born Lyung. “I’ve definitely noticed more Asian products at Costco lately.”
Asian Americans are the fastest growing demographic 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 make up 11.9 percent of Costco’s buyers, according to market research firm Numerator.
Costco’s dominance among Asian-American consumers is good for the long-term growth trajectory of the retailer – and has implications for other retailers as the industry grows alongside the diversifying United States.
“We have the opportunity to take what was once held as niche or minority markets and put them at the center of US trends,” said Kimberly Graham, head of diversity initiatives at consumer intelligence firm NielsenIQ.
“For Asian Americans, the rate of population growth certainly leads to the idea that … they will create big market changes. If their needs are served, it is essentially very profitable for everyone who serves them, “Graham said.
Opportunity for 13 billion dollars
The rapid growth and purchasing power of Asian Americans make the group a great consumer base for retailers. The Asian population in the United States jumped by 81% from 2000 to 2019, compared to a total population growth of 16%, according to the Pew Research Center. Americans of Asian descent have the highest average household income in the United States – although the demographic group also has the largest intragroup economic inequality in the country.
The untapped sales potential of Asian American consumers is $ 13 billion, according to NielsenIQ.
Central Asian Americans have some market habits that differ from those of other consumers, NielsenIQ found. Households of Asian descent are usually larger than those of the entire US population. Asian Americans are more likely to buy in bulk and look for bargains. As a result, Asian consumers are more than twice as likely to shop at warehouse clubs as the average consumer in the United States.
Costco declined to comment directly on inventory and consumer strategy, as it applies to Asian buyers. “Regardless of the products we sell, Costco’s philosophy is the same: research the market, identify the variety of products our members are interested in, and negotiate exceptional value for quality products and services,” Costco’s management told CNBC. in email.
The retailer does not spend money on advertising, but can cultivate affinity for the brand by word of mouth among different communities, said Marshal Cohen, chief industry analyst at market research firm NPD Group.
“Every once in a while on a very blue moon, you would hear of a big retailer focused on the Asian community,” Cohen said. “Word of mouth and community influence is spreading and this is helping to grow the business. So if a business like Costco cares about the Asian community, they share it and it multiplies. “
Cindy Zhou, 50, first heard of Costco from a friend who is also an immigrant from China. Zhou became a member of Costco around 2013 and now shops weekly for food, household goods and gas at his local warehouse in greater Cleveland.
“Almost all of my friends have Costco memberships,” said Zhou, an information technology specialist. “I like Costco because they have very good quality at a much lower price than other grocery stores.”
Zhou and other Costco buyers noted that their local stores have added special Asian items such as boba ice cream, cheong lap and oyster sauce to their rotating equipment in recent years. She recalled seeing exhibitions on Chinese holidays, the Mid-Autumn Festival and the Lunar New Year at Costco last year. Bowls are sold at Leung’s warehouse in California.
Asian American consumers can find food from their diaspora in local ethnic groceries and Asian supermarket chains such as H Mart, 99 Ranch Market and Patel Brothers. But seeing these products in one of the world’s largest retailers is rare.
With a market value of $ 185 billion, Costco reported $ 195.93 billion in total revenue in 2021, up more than 17 percent from the previous year. The company is due to announce its latest results after the market closed on Thursday. Its shares have fallen by more than 20% so far this year.
Zhou said when she or a friend noticed an Asian product at Costco that they would normally only see in an ethnic store, they told others about it in group chats on China’s WeChat messaging app.
“A lot of love to Costco”
Jing Gao, founder of the hot sauce brand Fly By Jing, is a big fan of Costco as a consumer, so when he got the chance to introduce himself to Costco’s buyers, she jumped at the chance.
“I’m obsessed with Costco. I go at every opportunity,” Gao said. “There’s something great about opening … not knowing what deals you’ll find.”
Fly By Jing at Costco Wholesale
Fly By Jing
Fly By Jing started as an online-only business aimed directly at consumers, 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 area in February. Just months later, Fly By Jing has already expanded or is entering markets in the Northeast, the Gulf, the Northwest Pacific, San Diego and Texas. The company plans to launch its Zhong dumpling sauce at Costco as well, starting in LA later this year.
An Instagram video announcing the launch of Costco has become Fly By Jing’s most effective post on the social media platform. Currently, the video has about 85,000 views, almost 7,000 likes and nearly 600 comments.
“Clearly there is a lot of love for Costco,” Gao said.
One customer who bought Fly By Jing at Costco is Leung.
“I would commend Costco for thinking about what young people want, what they have,” Lung said. “You’re starting to develop loyalty.”
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