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Coronavirus Panic Drives Sales at Costco

The COVID-19 coronavirus outbreak could lead to people being forced to work from home, avoid public places, and generally not interact with other people. It could -- in extreme scenarios -- cause supply chain problems that lead to shortages in basic staples including food.

While that scenario may not be likely, many Americans are taking a better-safe-than-sorry approach that means stocking up on food as well as other staples. And that has proven to be very good for Costco Wholesale (NASDAQ: COST).

Costco has experienced a spike in sales. Image source: Costco.

Customers flock to Costco

Warehouse clubs including Costco offer consumers an easy way to stock up. The chain sells items in bulk so you can buy anything from toilet paper to cereal and coffee pods in large quantities that could see you through any virus-related exiles at home.

Whether it's driven by fear or an abundance of caution, Costco has experienced a short-term boost in sales, CNBC reported. This has led to some minor shortages in some items but the shelves at most locations remain well stocked.

Buying it forward?

Many items consumers would stock up on in advance of potential coronavirus disruptions to normal life have indefinite or long shelf lives. That could mean that Costco is actually pulling sales forward which could lead to softer periods after the virus concerns pass.

If a consumer, for example, buys cereal, pasta, and toilet paper in bulk, he or she won't have to purchase those items for a while, assuming coronavirus does not lead to major disruptions in everyday life. It's also possible that the warehouse club has added some sales that would have gone to traditional grocery stores as shoppers anticipate needing certain staples in larger quantities.

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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.


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