Whether you’ve ever spent a meaningful amount of time in a Costcowarehouse club store or not, you’ve got to hand it to the company — it’s clearly doing something right.
During the company’s Q2 2026 earnings call, Costco reported that it had an unbelievable 40.4 million paid memberships — a 9.5% increase from a year prior. The company also said it’s focusing on expansion.
That’s a smart move for Costco. Each new warehouse club store the company opens has the potential to drive thousands of new memberships and recurring fee revenue.
For Costco, membership fees are basically free money. And the company is already collecting a lot of it.
During Q2 of 2026, membership fees generated $1.36 billion for Costco, helping to support strong overall results that included $68.24 billion in net sales and $2.04 billion in net income.
Opening more warehouses also increases the scale of Costco’s purchasing power, allowing the company to negotiate more favorable terms with suppliers so it can pass the savings it’s known for onto customers.
But this time around, Costco is thinking outside the box when it comes to opening more stores. And the company’s creative approach to expansion could allow it to reach areas that were previously off limits.
Costco is rethinking its real estate strategy to open new stores
During the company’s most recent earnings call, CEO Ron Vachris confirmed that expansion is a major priority for Costco right now.
“Our real estate and operations teams are focused on increasing our pipeline of new warehouses both domestically and internationally,” he said.
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Vachris confirmed that since Costco’s last call, the company opened four warehouse club stores, including one relocation in the US, one net new US location, and two additional Canadian business centers. Those openings bring Costco’s total warehouse count to 924 locations on a global scale.
Vachris also said that Costco expects to have 28 net new openings in fiscal year 2026 and would be targeting 30 or more new openings per year in the coming years.
Traditionally, Costco has opened warehouse club stores in suburban areas. But now, the strategy is shifting.
“Real estate development will increasingly utilize creative, high-density models, such as multi-story warehouses with integrated residential elements, to access previously unreachable urban markets,” the company stated during its most recent earnings call.
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Costco faces challenges as it goes all-in on expansion plans
It makes sense for Costco to increase its store footprint. But doing so isn’t without challenges.
One major hurdle is real estate.
Costco warehouse club stores aren’t exactly small. They require huge parcels of land with enough room for extensive parking and, ideally, a gas station.
These requirements aren’t necessarily so hard to meet in suburban areas. But they can be very difficult to replicate in dense cities.
That’s why Costco’s new approach to expansion is such a great idea. Moving to multi-story and high-density developments is a great way for the company to break into urban markets that may have previously been off limits.
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As much as urban areas come with space-related constraints, they’re also, by nature, loaded with people – people who have the potential to become loyal Costco members.
In addition, Costco is investing in technology and operational improvements, including enhanced self-checkout systems and digital tools, to support higher store traffic as it expands.
Ultimately, Costco’s creative approach to real estate could allow it to push into markets that were once considered out of reach. If the company’s efforts prove successful, multi-story warehouses and mixed-use developments could represent the next phase of growth for Costco – one that leads to an even larger membership base.
Maurie Backman owns shares of Costco.
Related: Costco cuts prices on eggs, butter, other staples
