Extended Operating Hours and Retail Resilience: How Costco's Strategy Fuels Loyalty and Growth

The retail sector's resilience in 2025 hinges on its ability to adapt to shifting consumer behaviors, particularly the demand for convenience and value. Among the most compelling strategies is the extension of operating hours, a tactic that Costco has leveraged to drive both sales growth and customer loyalty. By analyzing Costco's approach and broader industry trends, investors can gain insight into how operational innovations are reshaping retail's competitive landscape.

Costco's Executive Hour Experiment: A Win-Win for Sales and Loyalty

Costco's decision to grant Executive members early morning access at all U.S. locations since September 2025 has yielded measurable results. According to a report by Business Insider, this initiative contributed a 1% weekly sales boost, translating to approximately $61.96 billion in Q3 2025 net salesCostco says new extended hours added 1% to weekly sales [https://www.businessinsider.com/costco-earnings-new-extended-hours-added-to-weekly-sales-2025-9]^[4]. The move also incentivized upgrades to Executive memberships, which now account for a growing share of Costco's 137 million global cardholdersThe Secret Sauce That Drives Costco's Customer Loyalty [https://www.forbes.com/sites/rogerdooley/2024/06/26/the-secret-sauce-that-drives-costcos-customer-loyalty/]^[1].

This strategy aligns with Costco's membership-centric model, where fees contribute 65% of its $7.4 billion 2024 net incomeThe Secret Sauce That Drives Costco's Customer Loyalty [https://www.forbes.com/sites/rogerdooley/2024/06/26/the-secret-sauce-that-drives-costcos-customer-loyalty/]^[1]. By offering time-based exclusivity, Costco rewards high-value customers while mitigating congestion during peak hours. The result is a dual benefit: increased foot traffic during off-peak periods and a 90%+ U.S. membership renewal rate, underscoring the strength of its loyalty ecosystemThe Impact of Customer Loyalty Programs on Customer Retention in the Retail Industry [https://www.researchgate.net/publication/356986047_The_Impact_of_Customer_Loyalty_Programs_on_Customer_Retention_in_the_Retail_Industry]^[3].

Broader Retail Trends: Extended Hours as a Competitive Edge

Costco's success reflects a wider industry shift toward aligning operating hours with customer schedules. A 2025 Deloitte report highlights that retailers prioritizing "phygital" (physical + digital) convenience-such as late-night hours or staggered access-see higher customer retention2025 US Retail Industry Outlook | Deloitte Insights [https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html]^[2]. For example, QuikTrip, a U.S. convenience store chain, has paired extended hours with a "good jobs" strategy, reducing employee turnover and ensuring consistent service during peak demandCostco and other retailers prove a 'good jobs' strategy works [https://www.hbs.edu/bigs/costco-and-other-retailers-prove-a-good-jobs-strategy-works]^[6].

Moreover, data from Forbes reveals that 60% of retail executives plan to implement AI-driven tools by 2025 to optimize staffing and inventory during extended hoursHow Retailers Are Using AI And Emotion To Build Loyalty in 2025 [https://www.forbes.com/sites/garydrenik/2025/06/03/how-retailers-are-using-ai-and-emotion-to-build-loyalty-in-2025/]^[5]. These technologies enable retailers to balance operational costs with customer expectations, ensuring that longer hours do not compromise service quality.

The Loyalty-Driven Flywheel: Personalization and Emotional Engagement

Extended hours are most effective when paired with loyalty programs that deepen emotional connections. Costco's tiered membership model exemplifies this, as Executive perks-such as early access and higher cashback rewards-create a "sunk cost" effect, encouraging members to renewThe Secret Sauce That Drives Costco's Customer Loyalty [https://www.forbes.com/sites/rogerdooley/2024/06/26/the-secret-sauce-that-drives-costcos-customer-loyalty/]^[1]. Similarly, Surya Fresh in Indonesia reported that high e-service quality and tailored rewards increased customer retention by fostering emotional engagementThe Impact of Customer Loyalty Programs on Customer Retention in the Retail Industry [https://www.researchgate.net/publication/356986047_The_Impact_of_Customer_Loyalty_Programs_on_Customer_Retention_in_the_Retail_Industry]^[3].

AI-powered personalization further amplifies these effects. Retailers like e.l.f. Cosmetics have seen a 125% surge in mobile app usage by integrating SMS and push notifications, demonstrating how technology can turn extended hours into a platform for hyper-targeted engagementHow Retailers Are Using AI And Emotion To Build Loyalty in 2025 [https://www.forbes.com/sites/garydrenik/2025/06/03/how-retailers-are-using-ai-and-emotion-to-build-loyalty-in-2025/]^[5].

Implications for Investors: Sustainability and Scalability

For investors, the key question is whether these strategies are sustainable. Costco's 8.1% global sales growth in 2025 suggests that its model is scalable, particularly as membership fees remain a stable revenue streamCostco says new extended hours added 1% to weekly sales [https://www.businessinsider.com/costco-earnings-new-extended-hours-added-to-weekly-sales-2025-9]^[4]. However, challenges such as margin pressures from LIFO charges and rising operational costs highlight the need for continued innovationCostco and other retailers prove a 'good jobs' strategy works [https://www.hbs.edu/bigs/costco-and-other-retailers-prove-a-good-jobs-strategy-works]^[6].

Broader retail trends also point to long-term viability. A Bain & Company analysis notes that convenience-driven strategies-like extended hours-will remain critical in 2025 as consumers prioritize value and flexibility2025 US Retail Industry Outlook | Deloitte Insights [https://www.deloitte.com/us/en/insights/industry/retail-distribution/retail-distribution-industry-outlook.html]^[2]. Retailers that integrate these strategies with AI-driven efficiency and sustainability initiatives (e.g., eco-friendly loyalty rewards) are likely to outperform peersHow Retailers Are Using AI And Emotion To Build Loyalty in 2025 [https://www.forbes.com/sites/garydrenik/2025/06/03/how-retailers-are-using-ai-and-emotion-to-build-loyalty-in-2025/]^[5].

Conclusion: Retail's New Normal

The retail sector's resilience in 2025 is being defined by its ability to harmonize operational flexibility with customer-centric innovation. Costco's extended hours for Executive members illustrate how strategic time-based exclusivity can drive both immediate sales and long-term loyalty. As competitors adopt similar tactics-bolstered by AI and personalized experiences-the sector's winners will be those who balance convenience with profitability. For investors, this evolution underscores the importance of monitoring how retailers adapt their operating models to meet the evolving demands of a value-conscious, tech-savvy consumer base.