Richard Galanti: Well, in a way, we’re doing the same thing here with a few people, most notably Instacart. And a little bit was shipped down in the Southeast. And I think we’ve got a test in Texas with Uber. But at the end of the day, we had that same-day delivery already as function. Over there, it is a third-party that’s doing it, like Instacart or these other ventures here. So, it’s just — it’s new. It’s not something that’s new to the warehouse club industry in China. You could look elsewhere and find it too. But it’s certainly something that makes sense. And again, in part because of social media, there’s been a lot of publicity and just, I mean, from the day it launched three days ago, it’s gone nuts in terms of how many page hits it’s getting and all that stuff. But it’s just part of the business.
Scott Mushkin: Got it. And then we’ve talked about this over the years, and I think you said you’re going to do 28 net new clubs this year. What’s the capacity of the organization? Where do you go? Do you envision that going to 35 and 40? Like, how should we think of it as we move out three to five years? Is it something that’s going to trend up?
Richard Galanti: I think, who knows, but I think generally it probably trends up a little. There was a few years there, excluding the year when COVID hit, that we only did like 13 because there were shutdowns in certain countries of construction and as well as the US. But if you look back, excluding that year over a three or five-year period, plus or minus a couple of years there, it was about 23 a unit. Without looking at numbers, about 23 units a year. At the time, you said, what do you see over the next 10 years? What we saw collectively was is somewhere in the, hopefully, targeting, let’s say, 25 for the next five years per year, and then going up to 25 to somewhere in the high-20s, if not 30. I think that’s generally the sense that we feel.
Could we do more? Yes. Are we comfortable doing it this way? Yes. I think part of that is it’s such a hands-on business. I get to say that from sitting here in headquarters most of the time, not traveling like my colleagues do in operations. But, Ron is a great example. I mean, he and several regional executives in operations, if there’s an opening somewhere, or not an opening, they’re out visiting, usually at least two, if not three weeks a month, or out for three or four days, jumping around, visiting locations, not only existing locations, but new sites. And so, I think from a standpoint — and the other thing is, particularly in newer countries, you want to get the first one open so you can train 50 or 80 people that want to move to the next location in that city that’ll help that one go.
And we were very fortunate a few years back in the first Shanghai, in Minhang in China, where we had a number of employees from Taiwan that wanted to move and be promoted into new locations, new jobs over there. So, that helps us when we have one, then two, then four, then whatever. So we take it slow. All I know is, we’re all very busy, and, particularly the operators and merchants as well. And so that’s kind of the paradigm that I think that we’re going to continue to work at. Something in the 25 range, and then heading up. Just a month — just a quarter ago, I think our budget for this year was 32, and now — or 31, now it’s 28. And that’s simply timing. There is two or three that are pushed, that for whatever, construction delays, or you found something in the soil delays, or whatever it might be, they might have moved from mid to late summer to early fall, which is the new fiscal year.
So, I’m feeling pretty good that we’re going to open 25-plus for the next couple of years, and then probably 28-plus, and go on from there.
Scott Mushkin: Perfect. Thanks, Richard.
Operator: Next question comes from the line of Greg Melich with Evercore ISI. Your line is open.
Gregory Melich: Hi. Thanks, Richard. You mentioned the word surreal, the feeling of retiring. I’d say it’s almost as surreal as a $4.99 chicken. So, thank you for all the help over the years. I would say, I guess two things I want to touch on. One is ticket pressure. It looks like just in the most recent sales, with traffic growing more and more, that you’re seeing some AUR pressure. Is that 0% inflation turning to deflation, as the merchants are seeing into March and April?
Richard Galanti: Well, I think that, again, the inflation number is a calculation based on costs and mix. I think it’s probably — I wouldn’t look too closely if the average ticket was up a couple of — a few tenths in the quarter, and then it was down a percent, down in February by a tenth. That’s still relatively close. Some of it’s a mix change, I’m sure, and some of it is — some of the examples I gave you about lower pricing. Even if the underlying cost hasn’t changed, some of it may be in terms of how we package, and we take advantage of that. So — and that’s on the sales side and not on — not the exact cost from yesterday.
Gregory Melich: So, looking ahead, that number of flat looks pretty good from what the merchants are seeing today.
Richard Galanti: Yes. I think when I go to the last budget meeting two weeks ago, I think there’s — in the presentations, there’s a lot of — I used the phrase a few minutes ago, upscaling. I didn’t use that phrase, but then buying with conviction. I mean, I think the buyers are looking ahead right now in an offensive way and a positive way. Hopefully, we’ll be right, but we feel so far we’re being right.
Gregory Melich: I wanted to follow up with my second question on the Instacart side of e-commerce penetration. What would e-commerce penetration be now in the US if you included the Instacart delivery and the other deliveries?
