One of the USA’s biggest retailers, and globally behind only Amazon and Walmart, Costco has quietly become a major player in the UK. With 29 British warehouses, it turned over £5 billion in annual sales last year, cementing its position as the country’s second-largest food wholesaler after Tesco-owned Booker. At the core of its business, however, Costco is a subscription retailer.
While it may look like a traditional warehouse retailer – selling high volumes of products at low margins – the retailer’s huge global success is built on a subscription-first model that powers everything from pricing strategy to global expansion. And with online sales now surging up to 25% of its total revenue, it’s at a pivotal stage in its growth journey as it transitions into a digital-first, omnichannel retail powerhouse.
Cashing in on customer loyalty
Boasting 81 million paid memberships and renewal rates above 90% globally, Costco has turned loyalty into a high-margin revenue stream that underpins its ability to offer rock-bottom prices and generate customer stickiness. Shoppers pay an annual fee which allows them access to Costco’s discounted products – and with minimal overheads, these membership fees alone generated $5.3 billion in revenue in fiscal 2025. This recurring income allows Costco to cap gross margins at around 14%, reinforcing its value proposition. Executive memberships – priced higher but offering perks like 2% cashback – now account for nearly half of all members, driving higher spend per household and deeper engagement.
This model has brought the company a great deal of success. Costco’s fiscal year ended August 31, 2025, with net sales up 8.1% to $269.9 billion and net income rising to $8.1 billion. Comparable sales grew 5.9% globally, while ecommerce surged 15.6%, showing the strength of its omnichannel strategy. Membership fees rose 10.4% year-on-year, supported by a fee increase in late 2024 and continued adoption of the Executive tier.
Omnichannel strategy
At the same time, the retailer has evolved into a true omnichannel player, more than tripling its ecommerce revenue since 2020. Its strategy blends curbside pickup, same-day delivery partnerships (Uber Eats, Instacart, DoorDash), and a fully integrated mobile app offering real-time inventory tracking and personalised recommendations.
The retailer is also investing heavily in AI-driven capabilities to optimise operations and enhance customer experience. Current initiatives include predictive demand forecasting, real-time inventory management, and personalised marketing for members. AI is also being deployed for scan-and-go checkout, dynamic pricing, and energy and labour optimisation, while future plans point to deeper personalisation and retail media opportunities – turning Costco’s rich membership data into a competitive advantage.
It is also expanding its physical footprint. Costco opened 27 new warehouses in 2025, including sites in Europe and Asia, and plans to accelerate international growth. A new 1.5 million sq. ft. logistics hub in Spain signals its commitment to European growth, while UK expansion remains on the radar amid strong renewal rates and rising brand awareness.
The future for Costco will lie in leveraging its rich customer data to its maximum potential – perhaps even becoming data-first, product second. The company is a blueprint for subscription-led retail: predictable revenue, high loyalty, and operational leverage. For UK retailers exploring paid loyalty schemes or subscription tiers, Costco demonstrates the power of turning customers into members – and using that income to fund a relentless focus on value.
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