Costco's Long-Term Growth Potential: A Strategic Assessment for 2028

Costco Wholesale Corporation (NASDAQ: COST) has long been a cornerstone of the retail sector, leveraging its membership-driven model, private-label offerings, and strategic international expansion to maintain a competitive edge. As the global retail landscape evolves, investors are increasingly scrutinizing Costco's ability to sustain its growth trajectory through 2028. This analysis evaluates Costco's competitive positioning, membership growth, and international expansion as key drivers of future stock performance, supported by historical financial trends, market share dynamics, and macroeconomic tailwinds.

Competitive Positioning: A Membership-Driven Moat

Costco's business model is anchored in its membership-based structure, which generates recurring revenue and fosters customer loyalty. In fiscal 2025, membership fees contributed $5.323 billion to total revenue, with a U.S. and Canadian renewal rate of 92.8%. This high retention rate creates a stable cash flow, allowing Costco to reinvest in growth initiatives such as e-commerce and private-label product development. The Kirkland Signature brand, accounting for 25-30% of total revenue, further enhances profitability by reducing reliance on supplier margins.

Compared to rivals like Walmart and Amazon, Costco's low-price, high-volume strategy differentiates it in a market increasingly shaped by inflationary pressures. Analysts note that Costco's ability to absorb cost increases through bulk purchasing and private-label scaling provides a buffer against margin compression. For instance, in Q1 2026, Costco reported a 20.5% year-over-year increase in e-commerce sales, driven by its expanding digital infrastructure. This adaptability positions Costco to outperform peers in an era where omnichannel integration is critical.

Membership Growth: A Catalyst for Sustainable Revenue

Membership expansion remains a core growth lever. With 79.6 million global members as of Q3 2025, Costco's base continues to expand, particularly in the U.S. and Canada, where Executive members (paying a higher fee) now constitute 47.3% of the total. A study projects membership revenue to grow by 56% by 2034 compared to 2024 levels, aligning with historical trends of consistent fee increases and demographic expansion.

The resilience of membership renewals, even amid economic uncertainty, underscores the model's strength. For example, despite a shift toward digital enrollment, renewal rates in the U.S. and Canada remained near 92.2% in 2025. This stickiness ensures a predictable revenue stream, which analysts argue is critical for sustaining growth in a volatile macroeconomic environment.

International Expansion: Unlocking New Markets

Costco's international strategy is a pivotal growth driver. As of 2025, the company operates 914 warehouses globally, with 110 in Canada and significant presence in Japan, Mexico, and the U.K. International operations contributed 13.93% of total revenue in 2024, and analysts project this share to rise as Costco accelerates expansion. The company plans to open 30-35 new warehouses annually, with half located outside the U.S. in 2026.

Emerging markets, such as India and Southeast Asia, represent untapped potential, though challenges like localization barriers and regulatory hurdles persist. Meanwhile, established markets like Japan and the U.K. offer opportunities for same-store sales growth and e-commerce penetration. For example, Costco's e-commerce segment in international markets grew to 16.1% of total sales in 2025, reflecting the effectiveness of its digital strategy.

Macroeconomic Tailwinds and Valuation Considerations

The global retail market is forecasted to grow at a 5.8% CAGR from 2025 to 2034, reaching $40.42 trillion according to market research, with e-commerce leading the charge at a 10.9% CAGR. Costco's focus on digital transformation aligns with this trend, as does its emphasis on "big and bulky" items (e.g., saunas, golf carts), which cater to niche demand and higher-margin sales according to consumer trends.

However, Costco's stock valuation remains a point of contention. A forward P/E ratio of 51.4x suggests the market has priced in significant growth, which could limit upside if expansion slows. Analysts project a potential 23% upside by 2028, assuming 7.5% annualized revenue growth and stable margins, but caution that inflationary pressures and supply chain disruptions could temper performance.

Strategic Outlook and Investment Implications

Costco's long-term growth hinges on its ability to balance domestic saturation with international opportunities. While U.S. market share is projected to remain steady at ~10.3%, international expansion and e-commerce innovation will be critical for sustaining revenue growth. The company's membership model, with its high renewal rates and fee-based structure, provides a durable foundation for navigating macroeconomic headwinds.

For investors, Costco represents a blend of defensive positioning and growth potential. Its stock may underperform in the short term due to valuation concerns, but its strategic initiatives-private-label expansion, digital integration, and global footprint growth-position it to outperform in the medium to long term. As one analyst notes, "Costco's ability to adapt to shifting consumer preferences while maintaining its core value proposition makes it a compelling long-term play."