Costco Targets 30 New Warehouses Annually to Capture Gen Z Grocery Market
Costco Wholesale Corp. has unveiled an aggressive expansion strategy aiming to open 30 new warehouses per year over the next decade. The plan focuses on a balanced split between domestic and international growth while capitalizing on a significant shift in grocery preferences among younger consumers.
Key Takeaways
- Costco Wholesale Corp.
- has unveiled an aggressive expansion strategy aiming to open 30 new warehouses per year over the next decade.
- The plan focuses on a balanced split between domestic and international growth while capitalizing on a significant shift in grocery preferences among younger consumers.
Mentioned
Key Intelligence
Key Facts
- 1Costco targets opening at least 30 new warehouses annually over the next decade.
- 2Approximately 50% of new locations will be in the U.S., with the rest in international markets like Canada and Mexico.
- 317% of Americans aged 25-34 now consider Costco their primary grocery shopping destination.
- 4The company utilizes a 5-to-10-year real estate planning horizon for new site selection.
- 5Only 3% of consumers aged 45-54 prefer Costco for primary groceries, highlighting a generational shift.
| Metric | |||
|---|---|---|---|
| Annual Expansion Target | 30+ Warehouses | Varies (Aggressive) | 10-15 Warehouses |
| Primary Demographic | Gen Z / Millennials | Broad / Value-focused | Suburban Families |
| Market Focus | Global (50/50 US/Intl) | Primarily U.S. | U.S. East Coast focus |
Analysis
Costco Wholesale Corp. is signaling a significant shift in its long-term growth trajectory, moving from a conservative expansion model to a more aggressive, data-driven strategy. During a recent first-quarter earnings call, CFO Gary Millerchip outlined a roadmap that targets the opening of at least 30 new warehouses annually. This represents a notable uptick from the company's historical average of 20 to 30 locations and reflects a strategic response to overwhelming consumer demand that has left many communities "waiting for a Costco." The company's real estate planning now extends five to ten years into the future, suggesting a high degree of confidence in the warehouse club model's longevity and its ability to scale both domestically and internationally.
A critical driver of this expansion is a profound demographic shift in the grocery sector. Data from GOBankingRates reveals that Costco is successfully capturing the next generation of high-lifetime-value customers. Approximately 17% of Americans aged 25 to 34 and 15% of those aged 18 to 24 now consider Costco their primary destination for grocery shopping. This is a stark contrast to older demographics, where only 3% of consumers aged 45 to 54 prefer the warehouse club for their primary grocery needs. By securing the loyalty of Gen Z and Millennials early, Costco is positioning itself to dominate the grocery market as these cohorts enter their peak earning and spending years. This "youth-first" trend is likely driven by a combination of price sensitivity in an inflationary environment and the perceived value of Costco’s private-label Kirkland Signature brand.
Approximately 17% of Americans aged 25 to 34 and 15% of those aged 18 to 24 now consider Costco their primary destination for grocery shopping.
The geographic distribution of these new warehouses is equally telling. Millerchip indicated that roughly half of the new locations will be situated in the United States, with the remainder spread across international markets including Canada and Mexico. This balanced approach allows Costco to mitigate the risks of domestic market saturation while tapping into high-growth international regions where the warehouse club concept is still relatively under-penetrated. The international expansion is not just about adding storefronts; it is about leveraging existing supply chain infrastructure, such as the distribution centers that often precede the opening of actual retail warehouses in new territories.
What to Watch
From a competitive standpoint, Costco’s expansion puts direct pressure on Sam’s Club (owned by Walmart) and BJ’s Wholesale Club. While Sam’s Club has a larger overall footprint in the U.S., Costco’s higher membership renewal rates and superior average spend per member provide a formidable moat. BJ’s Wholesale, which often targets similar suburban demographics, has been expanding its own footprint, but it lacks the global scale and brand cachet that Costco has cultivated. The "Costco Effect"—where the announcement of a new location can drive local real estate values and shift regional shopping patterns—remains a powerful tool in the company’s arsenal as it negotiates with developers and local governments.
Looking ahead, the primary challenge for Costco will be maintaining its high operational standards and unique corporate culture during this accelerated growth phase. Real estate acquisition in high-demand areas remains a bottleneck, as does the logistical complexity of managing a global supply chain that must support a 50/50 domestic-to-international split. However, with a clear 10-year roadmap and a growing base of young, loyal members, Costco appears well-positioned to transition from a suburban staple to a global grocery powerhouse. Investors and competitors alike should watch for how these new locations are integrated into Costco’s burgeoning e-commerce and last-mile delivery initiatives, which will be essential for maintaining its lead in the rapidly evolving retail landscape.
Timeline
Timeline
Strategic Expansion Goal
CFO Gary Millerchip announces the goal of 30+ new warehouse openings per year during the Q1 earnings call.
U.S. Market Penetration
Planned rollout of approximately 150 domestic locations to meet high suburban demand.
International Scaling
Significant investment in Canada and Mexico to balance global footprint and supply chain efficiency.
Cite This Page
"Costco Targets 30 New Warehouses Annually to Capture Gen Z Grocery Market." Retail Intelligence Brief, March 2, 2026. https://getretailbrief.com/story/costco-expansion-strategy-gen-z-grocery-trends
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