“When there are inflationary pressures and prices are going up, people look to save on gas,” said Richard Galanti, Costco’s chief financial officer. Rising gas prices typically help Costco’s sales, but hurt its profits.
Although wholesalers are able to make a profit on gas, they’re not making much: Costco, for example, reported that gasoline has a lower profit margin than the rest of its business.
Gas is a notoriously low-margin business, but retailers can make money from selling huge volumes of gas - even while charging much less than independent gas stations, said Kloza, adding that it’s not unusual for sales at a Costco location to reach up to 1 million gallons a month compared to an average of 80,000 gallons a month at typical gas stations.ĭespite their big-brand names, the vast majority of Exxon, Chevron, BP and Shell gas statons are independently owned, so they aren’t able to make a volume play like wholesalers do. Walmart, which owns Sam’s Club, does not disclose what portion of its sales come from gas. Gas makes up around 10%, $20 billion annually, of Costco’s overall sales and 9% of BJ’s.
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(And why not buy a flat-screen TV or a new couch while you’re at it?) Their gas stations give these warehouse stores an advantage that many retail competitors can’t match. These companies are “winners when gasoline prices go skyward,” said Kloza.Ĭostco, Sam’s Club and BJ’s want you to fill up your tank in their parking lots and then go stock up on giant jugs of ketchup, boxes of snacks and clothing. “It’s US consumers’ nature to go out of their way for lower gas prices.”Ĭostco, for example, is typically 20 cents a gallon below the market average, according to Tom Kloza, the global head of energy analysis at IHS Markit’s Oil Price Information Service. “People are seeking out the clubs because of the gas,” said Michael Baker, a retail analyst at D.A.
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