David Rosenthal: belief

Transcript context

…I thought you might go there. All right, bull case. The biggest one is the flywheel is spinning, and I'm not really sure who can catch them. Here's, again, from The Science of Hitting substack. "The average Sam's Club only generates about half the revenues of a Costco, and that gap has widened over time." Given the unit economics of the business, that's a tough hurdle to overcome, which explains why Sam's Club has a smaller unit base today than it did a decade ago. Crazy, right? Over the same period, Costco increased its US warehouse count by 1/3. Anyone who could have challenged them is just done. Yup. Maybe part of that is because Walmart has just been placing their resources elsewhere, particularly in the ecommerce fight against Amazon. I think Walmart has basically decided, look, we're not going to kill the Sam's Club business, but this is not where we're focusing our competitive energies right now. To be more fair, this is no longer a market share fight for the warehouse retail business. This is global retail. The question is, how much of global retail can Costco's model address? It's not Costco versus a specific competitor. It's Costco versus human behavior.…

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