Costco CEO Craig Jelinek told CNBC’s Jim Cramer on Wednesday that his company is drawing more young people to its membership base.
“We’re seeing more younger people sign up, absolutely,” Jelinek said. “What you don’t see is their purchases. They’re slightly going up as they become longer members, but initially the purchasing power from the younger generation compared to the boomers or [Generation] X is a little bit different in what they’re buying.”
Costco is unique to most retailers due to its membership model. Customers must sign up for a membership — which can cost either $120 or $60 a year — in order to enter the store and buy items.
Jelinek said the younger demographic — some of whom may not have started their own families — may be purchasing less merchandise than older generations. But he stressed that Costco is not a “margin house” but a “volume house.”
“Our concept has always been sell merchandise for the lowest possible price, how much you could lower the price, not how you can make more margin,” he said. “And that’s the way we run our business.”
Jelinek also touched on one of the retail warehousing giant’s newest products, gold bars. He said these bars are priced at $2,000 and that they sell out very quickly on the company’s website because of their value. According to Jelinek, Costco takes less than a 1% markup on the gold, and that the product drives more shoppers to the website.
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