Walmart and Costco's thin-margin business models suggest they could be two of the biggest winners as shoppers hunt harder for value.
Walmart and Costco's thin-margin business models suggest they could be two of the biggest winners as shoppers hunt harder for value.
Prices just accelerated again, and that's not great news if you're the one filling up the gas tank or ringing up groceries. It feels like every month, my wallet buys fewer groceries and less gas. It's hard times for all. But it's worth asking a different question than most people do when a hot inflation print hits: which companies actually get stronger while everyone else's budget gets squeezed?
Two of the biggest names in American retail, Walmart (WMT -0.09%) and Costco Wholesale (COST +0.65%), have built their entire business models around exactly this moment, and the latest numbers from both suggest it's working.
What the September inflation report said
The Consumer Price Index rose 3.7% over the 12 months ending in September, up from 3.4% in August, according to the Bureau of Labor Statistics. Gasoline did most of the damage, up 9.1% for the month and 34.2% over the year, while core inflation (stripping out food and energy) ran a cooler 2.6%. Food away from home -- restaurant meals, basically -- climbed 3.5% over the year, notably faster than the 1.8% rise in food you buy to cook at home. That gap matters when discussing stocks like Costco and Walmart. When eating out gets pricier faster than groceries, people cook more and shop harder for the best price on what they put in the cart.
COST Costco Wholesale
$995.53+$6.42 (+0.65%)
NASDAQ · As of 4:00 PM ET 10/19/26
The value angle of these stocks is getting real
Walmart and Costco don't market as cheap, but their business models are built so thin that there's barely any markup to cut if they wanted to. Costco caps its own markup at 14% on regular merchandise and 15% on its Kirkland Signature private label, full stop, a rule the company has stuck to for decades specifically so members never have reason to doubt they're getting the best price. Costco makes its real money on membership fees, not on what's on the shelf, so there is no incentive to overcharge on a jar of peanut butter. Walmart runs on a similar logic at even bigger scale: it would rather sell more stuff at a sliver of margin than fewer things at a fat one. When inflation hits, that structural cheapness becomes a magnet for savvy consumers looking to get the most bang for their buck. This leads to higher sales and better growth for the stock.
Averytin News Financial update.