Rudy Lai
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AI @ Costco

Membership model, consistent growth
Industry
Last updated
July 3, 2025 at 10:44 AM

Summary

  • Costco has progressively integrated AI technologies since late 2023, focusing on operational efficiency, inventory optimization, and customer experience enhancements.
  • AI use includes employee scheduling optimization, real-time supplier performance tracking, demand forecasting for warehouses, and advanced supply chain automation, leading to improved operating margins and global competitiveness by mid-2025.
  • By Q3 2025, Costco leveraged AI-powered retail media networks and backend AI agent systems to dominate its retail operations, contributing to stock momentum and expansion in e-commerce and travel services.

VIBE METER

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7 AI Use Cases at Costco

Retail Media
2025
Customer Facing
Traditional
Generative
Agentic
Outcome
Revenue
Costco uses AI-powered platforms to segment audiences and build retail media networks, enhancing targeted advertising capabilities and revenue opportunities. [1]
Supply Chain Automation
2025
Traditional
Generative
Agentic
Outcome
Costs
Costco implements AI-driven automation to streamline delivery processes, reduce lead times, and lower operational costs in the supply chain. [1][2]
Travel Search
2025
Customer Facing
Traditional
Generative
Agentic
Outcome
AI integration via Travelport+ accelerates trip search processes, making travel booking faster and more convenient for Costco members. [1]
Personalized Shopping
2024
Customer Facing
Traditional
Generative
Agentic
Outcome
AI personalizes shopping experiences by tailoring product recommendations, optimizing inventory, and improving customer service interactions. [1]
Inventory Optimization
2024
Traditional
Generative
Agentic
Outcome
Costs
Costco uses AI to forecast demand for products, including bakery items, enabling precise inventory restocking decisions to reduce waste and prevent stockouts. [1][2]
Employee Scheduling
2024
Traditional
Generative
Agentic
Outcome
Costs
AI models optimize employee shift scheduling based on peak shopping hours, availability, and sales forecasts to improve labor utilization and customer service efficiency. [1]
Customer Access Control
2024
Traditional
Generative
Agentic
Outcome
Risk
AI-based systems prevent nonmembers from entering stores without cumbersome manual receipt checks, streamlining customer entry and improving security. [1]

Timeline

2025 Q3

5 updates

By mid-2025, Costco leveraged backend AI agents, a curated warehouse model, and a closed-loop data ecosystem to drive retail media networks, demand forecasting, and e-commerce optimization, enhancing operational precision and stock performance.

2025 Q2

1 updates

Costco quietly increased AI integration into logistics and supply chain operations, contributing to improved operational efficiency ahead of Q3 earnings.

2025 Q1

2 updates

Costco implemented AI-driven automation to improve supply chain efficiency and introduced AI in its travel benefits to enhance trip searches and convenience.

2024 Q4

1 updates

Costco expanded AI usage to personalize shopping, optimize inventory, and enhance customer service improving the overall shopping experience.

2024 Q3

3 updates

Costco employed AI for bakery product demand forecasting starting initially in 2018, monitored supplier performance real-time, and improved HR tasks through machine learning.

2024 Q2: no updates

2024 Q1

2 updates

Costco tested new AI systems to prevent nonmembers entering stores and optimized employee scheduling based on peak hours and sales forecasts.

2023 Q4

1 updates

Costco began exploring generative AI applications to leverage member shopping data and enhance its operations.

2023 Q3: no updates

2023 Q2: no updates

2023 Q1: no updates

2022 Q4: no updates

2022 Q3: no updates

2022 Q2: no updates

2022 Q1: no updates

2021 Q4: no updates

2021 Q3: no updates

2021 Q2: no updates

2021 Q1: no updates

2020 Q4: no updates

2020 Q3: no updates

2020 Q2: no updates

2020 Q1: no updates

2019 Q4: no updates

2019 Q3

1 updates

Early recognition of AI and machine learning use in big box retail, including Costco alongside Walmart and Target, focusing on leveraging data science to solve business problems.