Staples are just that -- things that everyone always needs. When a retailer gets it right and gives customers what they need beyond the actual product, such as smart shopping and efficient customer service, it gives them a reason to keep coming back, and ensures the company's own survival and growth for years to come.

During the pandemic, many companies have managed to maintain customer loyalty thanks to their business practices. But three companies in particular were doing well even before the pandemic as a result of strong execution.

Costco, Walmart, and Target are all excellent companies that have built out a strong, distinguishing advantage. Each of these retailers is more than a simple supermarket and has used their unique models to expand.

Costco

The bulk-buy king, Costco (NASDAQ:COST) is a long-term buy that has proven its mettle during the COVID-19 pandemic. 

A couple loading a packages into the back of their car.

Image source: Getty images.

In the company's second quarter, which ended in the middle of February before the public health crisis intensified within the U.S., Costco had an 8.9% increase in comps while net sales were up 10.5%. Earnings per share were $2.10 versus $2.01 in the second quarter of 2019. Some of the tailwinds that led up to that were Thanksgiving falling later than usual, and customers already stocking up because of fears of the coming pandemic.

Costco currently operates 787 stores internationally and is planning to open about 20 stores in fiscal 2020. The company generally sees 5%-7% comp growth on average. One of its unique strengths is its membership fees. Customers are willing to pay these fees for access to Costco's great prices, which give the company a large sales boost, since it keeps markups low.

Membership income increased 6.3% to $816 million, keeping a steady rate for the past few quarters. The membership renewal rate was 90%, which it has been for 3 quarters, with 1 million new cardholders since the first quarter. Customers are clearly happy to pay for Costco's membership.

There was a 28.4% jump in e-commerce during the second quarter, even before people were under lockdown, and March sales had a strong showing, with a 9.6% increase in sales and 12.3% increase in comps.

Costco has strong growth prospects, although expect the upside to be slow and steady.

Walmart

Walmart's (NYSE:WMT) dominance begins with its 4,756 stores in the U.S. that include huge superstores to service customers' inclusive needs, at discount prices. For comparison, Target, a ubiquitous presence itself, has 1,871 U.S. stores. 

Walmart associate packing for delivery.

Image source: Walmart.

Although Walmart lagged behind in the digital landscape, in its capacity as the largest U.S. retailer, it had the wiggle room to make that mistake and has since become very competitive in that market, growing 35% in the fourth quarter of 2020.  That was mostly due to its grocery-delivery capacity, in which it exceeds any other supermarket and for which it has the infrastructure to make it happen.

Walmart has successfully managed Amazon's (NASDAQ:AMZN) onslaught by beefing up e-commerce and offering something Amazon has not been able to build -- in-store presence. It has also severely outmaneuvered its rival in the grocery sector (although Whole Foods is Amazon's most prominent retail brand), the company's most important sales builder.

Here's how Walmart's revenue has increased over time, right along with its stock price:

WMT Chart

WMT data by YCharts

Walmart continues to focus on providing its customers with value-enhancing services, such as on-site health clinics. 

During COVID-19, Walmart has hired 200,000 new employees to handle sales from increased demand.  The most important thing about that is the demonstration of how customers view the company and who they have confidence in and choose to service their needs.

Target

One of Target's (NYSE:TGT) greatest assets is its digital and in-store innovations. Target's general model is not so different from other discount retailers, but it does so much more.

With the customer in mind, it has developed many technologies to meet their needs, especially in the digital space, creating a high-level omni-channel experience. It bought Shipt to match Amazon Prime's one- day or same-day shipping, and that has been one of its biggest growth drivers. It has also seen tremendous success with its "buy online, pickup in store" program, as well as curbside pickup. In 2019, same-day services accounted for 90% of sales growth. In other words, it aims to give customers all of the permutations of what they need to feel comfortable shopping there. 

Target drive-up employee with customer in her car.

Image source: Target.

Target has been feeling the success in e-commerce, with consistent double-digit e-commerce growth, including 20% in the 2019 fourth quarter, and a growing rewards program with loyal customers.

Here are its stellar growth numbers over the past five quarters:

 

Q4 2019

Q3 2019

Q2 2019

Q1 2019

Q4 2018

Comps growth

1.5%

4.5%

3.4%

4.8%

5.3%

Digital growth

20%

31%

34%

42%

31%

Data source: Target quarterly earnings reports.

Target already let investors know that March sales increased 20% year-over-year, although margins decreased because most of that came from low-margin items. Again, the numbers demonstrate consumer confidence and the company's ability to perform in rough times.

Another initiative Target has undertaken is private label brands, which it developed to match serious brand names while offering more competitive pricing. With the future always in mind, we can expect Target to maintain its record of delivering innovation and customer service well into the future -- and for the retailer's share price to follow.