And then there was one year when we were asked a couple of years ago, it seemed like there was 1% to — 1.5% to 2% — even 2% change in penetration. So, people were, in my view, switching a little bit out, but that’s changed. We don’t see that as much anymore.
Peter Benedict: Got it. And then just on Costco Logistics, you gave some delivery numbers there. Just maybe step back a little bit. The penetration of Costco Logistics within the business, how meaningful is that at this point? What’s left in terms of maybe growing that? Is that just going to go with the big ticket trends, or are there, I don’t know, internal initiatives to kind of drive further penetration of Costco Logistics?
Richard Galanti: What is done strategically, I hate to overuse that word, it’s allowed us to be much better in value and delivery times and quality, and brought the delivery costs down on big ticket items, particularly appliances and big screen televisions, mattresses, and furniture, indoor and outdoor patio and mattress and patio furniture and indoor furniture, some sporting goods. And before we bought Innovel, we’re now called Costco Logistics in the spring of 2020. And the year before that, in the US, we did about 2.2 million drops. And a drop is anything from dropping off a sofa to delivering and installing a new refrigerator, freezer, or washer, dryer, and taking the old one away for disposal. Both of those are a drop, recognizing their extreme difference there.
But we did about 2.2 million drops in the US, none of which we did ourselves. With the acquisition of Innovel, I think for the – probably over the last — with this million this quarter, a rough number of 4 million drops, which I believe about 70% of them — over 4 million drops, and about 70% of them is us. We’ve reduced the delivery times. We’ve just introduced in some categories like two-hour windows where you can — or three-hour windows where you can choose, two-hour windows where you can choose. So, we’re constantly getting better, and we’ve greatly improved the value. And when you look at something, a category like appliances, we’re still a very low percentage of the industry. And, the fact that it was up, 20%-plus last month or last quarter, is a function of some of the things we’re doing in terms of shouting out how good of a deal it is and doing a better job of that.
But we think we have an opportunity to continue to grow those categories, recognizing they’re all meaningful categories, but they’re all small percentages of our total. That’s one of the nice things about us that we have lots of different categories.
Peter Benedict: Got it. Great. Well, thanks again, and best of luck, Richard.
Richard Galanti: Thank you.
Operator: Next question comes from the line of Rupesh Parikh with Oppenheimer. Your line is open.
Rupesh Parikh: Good evening, and thanks for taking my question. And Richard, I also want to offer my congratulations on your retirement. So just going back to the core on core margins, they’re up, I think, 25 basis points this quarter. Just curious what drove that strong performance, if there is anything in particular driving that?
Richard Galanti: Well, on the non-food side, the biggest thing is — well, not the big — a piece of it is comparing to last year when we had extra markdowns. I think we probably talked about it last time that non-food was — a year ago had been down year-over-year because of some of the supply chain challenges we had when such things were coming in late after the season in case some of the big ticket items from overseas containers. So, that was probably a chunk of it. On the Fresh food side, I said it was down year-over-year a little. Fresh is competitive, and we’re being ever competitive on it as well. And — but again, I don’t view any of that as being terribly meaningful in terms of, is that a big change that is coming. There’s always something that’s up a little bit, and there’s another thing that’s down a little bit.
Rupesh Parikh: Great. And then maybe just one follow-up question. On the expense side, you guys did have better expense controls this quarter. So, just curious to what changed sequentially, because the growth rate did decelerate by a few percentage points.
Richard Galanti: I can’t think off the top of my head other than I — actually, someone across the table has just said the word focus. At our budget meetings, which happen every four weeks with 150-plus people in town from all over the world, those are the kind of things we look at. And I think the operators are doing a better job of budgeting. And one of the things I think that came out at the last budget meeting in terms of budgeting, if you budget sales a little higher and they came in a percentage — a percent lower, you’ve got to your labor costs. And so a lot of it has to do with focus and being meaningful about it. We certainly don’t try to control expenses by not doing a wage increase when we think we need to, and we certainly have done that.
Rupesh Parikh: Thank you. Best of luck.
Richard Galanti: Thanks.
Operator: Our next question comes from the line of Scott Mushkin with R5 Capital. Your line is open.
Scott Mushkin: Hey, thanks. Hey, Richard, I feel like we should be, like, raising your jersey to the Rafters like a superstar is retiring here. I never came without you, to tell you the truth. So, congratulations.
Richard Galanti: Thank you.
Scott Mushkin: So, here you are. So, yes. So, we’ll have to see that The CFO Hall of Fame. So, a couple of things, some of your comments that you made. You’re doing this delivery in one hour in China. I think you started going from one club to three. Is that something you envision that can expand outside of China? And how should we think about that, maybe even vis-a-vis the US?
