Will CostCo benefit from stockpiling?

March 9, 2020 By Yiannis Tsiounis Tags: RETAIL, COVID-19

Recent news reports have highlighted an increase in foot traffic for CostCo as the spread of the coronavirus spurs people to stock up on essentials. Some analysis has put the number of visitors to CotsCo stores in the US up 72% year-over-year.

At Advan, we ran a detailed analysis of true foot traffic at CostCo. The graph below shows average daily traffic for each month since October 2015, with year-over-year changes overlaid.

Advan: average CostCo daily traffic

According to our data, CostCo saw an increase in traffic of 11.5% compared to last March. This number is in line with CostCo's published revenue growth. It also well within the range of growth that CostCo has shown in the past.

What drives these large differences in our reports versus past published reports? The reality is, it takes a lot of hard and detailed work to derive accurate measurements. Here is what Advan has done to arrive at the above numbers:

  • Manually geofence every single CostCo, and its parking lot, separately. Have 2 QA teams verify that the correct locations are geofenced.
  • Capture and verify the opening and closing dates (although the latter is not applicable in CostCo's case) of each of these locations.
  • Parse the hours of operations of each location, so that any data points before or after store hours are not included in the analysis
  • Procure multiple data sources, test their consistency and performance historically, choose which ones to combine and how.
  • Normalize the data to remove collection, geographical and other biases.
  • Verify that the data is correct versus published CostCo revenue: 0.89 year over year correlation over the last 3 years

Each of the above is a major undertaking, both in time and effort. But that is what is necessary and distinguishes a correct analysis from a claim that can be completely off the mark. It is common knowledge, but worth repeating: "half knowledge is a dangerous".

About Advan

Advan is the leader in the financial and real estate industries, enabling participants to analyze foot traffic data across multiple sectors, including retail, hospitality, consumer services, energy, technology, healthcare, REITS, financials and others. Advan derives its datasets using multi parameter models that analyze cellphone location data crossed with curated geofenced areas.

Top tier institutional investors spanning from quantitative hedge funds to fundamental asset managers have been the main consumers of Advan’s products.