Richard Galanti: Yes. Instacart is 1.5% to 2% percent, something below 2%, but more to 1.5%, which is still on a $200 billion retailer, it’s a lot. And we don’t include that because that — the Instacart person comes in, buys it, and checks out at the front end, so we don’t include that. So, you’d add — depending on rounding, you’d add 1% to 2% to the top-line number.
Gregory Melich: Got it. Well, thanks. Thanks for everything, and enjoy retirement.
Richard Galanti: I hope to see you all.
Operator: Next question comes from the line of Kelly Bania with BMO Capital. Your line is open.
Kelly Bania: Good evening. Thanks, Richard, and I have to add my congratulations to you. It’s been a pleasure. Just wanted to ask where Costco stands with retail media and advertising dollars. I think the last update I had was in the range of a few hundred million. Just curious if you’re willing to share with us where that stands today, what kind of growth that is experiencing, and just the Company’s thought process on investing in that down the line.
Richard Galanti: Well, without giving numbers out, we know there’s an opportunity there more than we’ve done in the past. In the last six or eight months, we’ve brought on people that are seasoned in this business to help us, and it’s a point of focus. We know that there’s money out there. We’ve always been very successful in other forms of vendor buckets, whether it’s end caps or advertising in our own Costco connection. And, of course, over the last several years, some advertising online or banners or placement, but there’s a lot more that can be done there. Rest assured, whatever it is, we’re going to use it to — just like when we always said if we can save a dollar on buying something, we’re going to give $0.80 or $0.90 to the customer.
I think that mantra will continue on this side as well. So — but there’s certainly ability for more dollars out there. Some of our big retail competitors have talked about doubling in five or six years what they have. I think, again, it’s a lower market share for us, so there’s a little more opportunity for us to continue to grow that.
Kelly Bania: Thank you. And maybe just can I just follow up with the decision to roll out Apple Pay? Costco is pretty notorious for being strict on the payment method you can use. So just maybe the thought process on that, what you expect that to do for your e-commerce business, and any economics you can share.
Richard Galanti: Yes, on e-commerce, there’s not as many stored cards for our members. And as we’re doing more with a digital wallet, that’ll help as well. So, it’s something that should help.
Kelly Bania: Fair enough. Thank you.
Operator: Next question comes from the line of Oliver Chen with TD Cowen. Your line is open.
Katy Hallberg: Hi there, this is Katy on for Oliver. And, of course, best wishes to you in your retirement. Just wanted to talk a little bit about the Kirkland price gap versus national brands. I know you touched on the Kirkland brand a little bit earlier on the call. But how has that price gap changed, especially year-over-year? And how has there — has there been any impact to unit elasticity given that price discrepancy? Thank you.
Richard Galanti: Well, we definitely have seen an impact from it. I think historically, the view was it has to be at least as good, if not better quality than the leading national brand, and at least a 20% savings as compared to what we sell the national brand for. And those metrics continue in that regard. I think what we’ve seen when we look at some of the items that have risen greatly in price, like paper products, on a percentage basis over the last several years because of freight costs, because of pulp prices, because of energy, all those things have dramatically increased. And what used to be — I don’t know the exact numbers, but for an 18-pack of — a 24-pack of toilet tissue or a 15-pack or 18-pack of paper towels, you’ve got price points in the high $20s, if not low-to-mid $30s.
And where we can show a dramatic savings on that, we’ve seen dramatic changes in unit market share towards Costco — towards Kirkland Signature. But that’s something that’s been an iterative process over many years, probably goes up and down a little bit. I’d say it’s gone up a little bit in terms of a little more of a penetration in the last couple of years.
Katy Hallberg: Great. Thank you. And then just to follow up on the store discussion and unit growth, can you just provide a little bit of color on how the international store openings are performing just from a productivity angle? How is that versus the more tenured stores as well as the domestic stores?
Richard Galanti: I don’t think there’s a big difference. In new markets, it’s always a little slower. So, like when we opened originally in Iceland or Sweden or Auckland or some of those or France several years ago, you’re always going to start — or frankly, Japan 20 years ago, you tend to start out lower. In some cases, it’s also a question is, some local vendors may not want to — local country vendors may not want to sell you because they want to upset all the big traditional that have all the market share before we enter. And once we get two or three open, they talk to you a little more. And so I think all those things help us as we grow. Certainly, it’s changed a little bit in the last few years. China being the most recent example, when we opened the first one in Minhang in Shanghai, what, about four years ago?
It made international news based on just the sheer number of members we signed up and everything. So we have a lot faster start, I think. Each year, we have a lot faster start than the year before. And so I don’t see a big difference there. We certainly — if you look in the US, I mean, I think one thing that’s interesting is this fiscal year, we’re going to open, whatever, 28 units. Let me get my page here. And, I think of the 28, 20-plus are in the US, which is — some people have asked, has it slowed down internationally? No, international takes a little longer to do. But what’s interesting is, is we have a lot more runway than we ever thought possible. If you had asked us five years ago, by now, how many would we be putting in this year in the US?
