Can Costco Pay Membership System Subvert Clothing Stores?

In the Internet era, the concept of increment and stock is the most concerned.

In clothing stores, there are also incremental and stock, which is the concept of old customers and new customers.

In jargon, if we want to increase the store's performance, maintain the stability of the old customers, and attract new customers, we can keep the business in progress.

In recent years, the clothing store, using the Internet thinking, is facing the incremental weakness and the loss of stock.

Friends in the industry are talking about increments too difficult. Maintaining stocks seems relatively easy.

So for the old customers, the clothing store will work hard, regular VIP activities, more frequent interaction and interaction, birthday gifts and so on.

But there will still be a large number of old people running away.

So a large number of clothing stores began to try to make old customers pay in the store, recharge, membership cards, annual fees are all on, so that they are not afraid to run, after all, people always want to get a return after they pay.

However, there are few outstanding and lasting ones.

There are a lot of enterprises that have paid membership in China, such as INTIME365 members of Yintai members, Jingdong Plus members, Tmall 88 members, hungry super members, box horses, fresh X members, etc., and more and more consumers in China are starting to accept the payment membership system.

To say that the pay membership system must be Costco, a physical retailer who has kept growing for 15 years has increased 1.7 times in the past 10 years.

As a traditional retail companies with a trend of growth, Costco has been called "the most worth learning retailer" by Amazon founder Bezos.

In fact, the business mode of Costco is very simple. The average profit of the goods sold is 11%, and the price difference is only to cover the operation cost, and the membership fee income is net profit.

According to the latest financial report, Costco's 2019 quarter fiscal year third quarter revenue was 34 billion 740 million dollars, compared with the same period last year, its revenue was 32 billion 300 million dollars, an increase of 7.4% over the same period last year, and net profit rose to 906 million US dollars.

Growth has been achieved for the 15 consecutive fiscal year.

In the third quarter, sales of commodities accounted for $33 billion 960 million, accounting for 97.8% of total revenue.

The membership fee is $776 million, which accounts for 2.2% of the total revenue.

Costco's membership fee accounts for 2.2% of total revenue, but has created over 80% profits.

Clothing stores copy this pattern very much. Customers pay annual fees and become paid members of clothing stores. After that, you can enjoy the low discount of clothing and spend less money to enjoy more value than others.

All this seems very reasonable, but there is a big gap in reality. The most important mechanism is the mechanism behind it.

Anchor points of products

The products sold by Costco are related to people's necessities and daily necessities.

The anchor point of the product is very clear, and the same brand, the same type of goods may be priced clearly in WAL-MART and other stores.

Therefore, Costco members can easily know the value of their enjoyment through comparison.

In contrast, the clothing industry is very vague, because the current clothing industry's discount promotions are intense and frequent.

From the end of the season to the end of the season, the discount line takes the form of roller coaster.

Discount promotion has become a necessary means of daily clothing management.

Consumers have already had a discount at the end of the mid season.

And the anchors of clothing prices not only exist in their own discount lines, but also have similar brands.

The daily discount activities of the brand and the discount of paid members are likely to bring the reverie of "brand profit space" to consumers.

Especially the new brand, it is easy to create the illusion of "originally the price".

Harsh and strict election mode

Another major feature of Costco is that stores provide only about 4000 of active SKU. It is not easy for manufacturers to enter Costco.

Each category of Costco is carefully selected. Each category provides consumers with the best two or three strict selection styles.

Therefore, the sale of goods does not seek to enrich and pursue reasonable, as Costco said: "if Costco shop does not sell such things, then your home may be redundant."

Notice that the sales target of Costco is your home.

And most clothing stores, the first consumer units are people, as much as possible from head to toe to provide a wealth of products, is as much clothing as possible.

As for strict selection, that is another matter.

Costco can choose not to choose the white tiles, so clothing should consider a problem. What aspects can it be reflected in the strict selection of clothing stores?

Abnormal member return policy

Costco stipulates that other electronic products, such as computers, digital cameras and projectors, need to be returned within 90 days after purchase. Other commodities need no reason to return goods, nor do they have any time to return.

As long as your Costco membership card has a consumption record, it can be returned.

This return policy is quite a prestige building in towns and townships. In clothing stores, it is very good to have 7 days without reason to return.

If over 30 days, clothing products may be out of season.

So the after-sale policy of paid members is really important.

High value-added services

Costco also has many other branches, such as tire repair, drugstores, clinics, photo flushing, gas stations, baking houses, travel agents, etc.

The purpose of this is to increase the renewal rate and increase the stock of paid members.

According to the financial data, Costco has 53 million 100 thousand paid members in the United States, and the number of global members has exceeded 90 million.

Its 2019 fiscal year third quarter continued rate of 90.7%.

Some people say that Costco's fee paying members generally do not learn, but I find it hard to copy, and must be smart.

The clothing industry wants to use this mode to seek growth. Yes, no matter how the industry develops, after all, the stock stability of old customers can be increased. Otherwise, they will come as much as they do and how to grow.

Whether the pay membership system can subvert the clothing industry depends on whether there is a more innovative mechanism suitable for the industry.

Costco Shanghai shop will start soon. TA has taught us that once members pay, they can enjoy different prices like other supermarkets, and ensure that these products are of high quality and low price. They will also have free short-term use rights and extra value services.

So we have to understand that if a member of a clothing store wants to pay a member, what is the reason for membership to pay?

Do we only have a concessional discount?