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Costco proves why it's Amazon-proof as stores like Target and Macy's struggle

Business Insider logo Business Insider 1/15/2020 Mary Hanbury

Target joined the lineup of retailers to report weaker-than-expected holiday sales numbers on Wednesday.

The big-box store reported that sales grew 1.4% during November and December, breaking its eight-quarter streak of 3% growth or more.

While analysts weren't ready to sound the alarm just yet, its results stood in stark contrast to another one of retail's top players - Costco, indicating that the warehouse chain really is one of the few players that has managed to stave off the threat of Amazon.

What does Costco do best?

Despite technical glitches over Thanksgiving, which experts estimated to have cost Costco as much as $11 million in online sales, the warehouse chain reported a 9% increase in same-store sales during the most recent holiday season.

When compared to its brick-and-mortar peers - Macy's, Kohl's, and, most recently, Target - these numbers look out of place, but they're proof that Costco's unique business model and shopping experience are paying off with customers.

Experts say there are several key reasons for this. First, while Amazon is king on convenience, Costco's pièce de résistance is that it offers discounts on products bought in bulk, and these deals give customers a reason to keep coming back to the store.

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"Members trust that they are going to get a good deal on whatever they buy," Timothy Campbell, a director at Kantar Consulting, told Business Insider. "I think the fact that it has been doing that for decades has enabled it to withstand the online onslaught."

Moreover, as it is a membership-only club, customers have more incentive to stay loyal to the brand and shop here more frequently.

In addition to deals, Costco offers its members an array of benefits: deals on vacations and cars, for example, as well as cheap gas, which drives foot traffic to stores.

Costco© Federic J. Brown / Getty

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