I love Costco

Tom Dougherty, CEO – Stealing Share

15 November 2016

A case study in exclusivity & more: Costco

Costco might be my favorite place to shop, ever.

Sure, I’ve rattled on about Ikea, have praised the store concepts of Verizon and I believe retailers can copy the atmosphere of the Apple Store. But none of them hold a candle to Costco.

Please, tell me if I am alone with this. But I think not. There is a rush with Costco like none other. The excitement comes with pulling out your membership card to be clicked into the warehouse, for instance.

That rush, if you’re like me, is a little like the anticipation I had as a child Christmas morning. There is always something new (albeit, a lot of items I don’t really need) to pique my interest – and that thill of discovery is indeed just like getting a gift from Santa.

Costco and its model.

Costco

Costco membership has its advantages, both rational and emotional.

It begins with the membership.

Actually, we should look at it differently than a membership. What we are really paying for is a kind of exclusivity. Membership can be a hurdle in some cases (like credit unions, but that’s because of other factors).

Mostly, however, an emotional driver is being part of an exclusive club. In this case, Costco promises lower prices (especially in bulk) but members have found that it offers loss leaders that give it some pizzaz.

Consider this from investopida.com: “The biggest Costco loss leaders in America right now are rotisserie chicken, the hot dog & soda combo and gas.

A Bloomberg article has calculated that Costco earns only $14 million in profit a year on its sale of 70 million chickens…These chickens, placed deep into the store along with the cheap fruits and vegetables, mean that customers have to walk through lots of merchandise to pick one up – and hopefully, along the way, they’ll grab some other products to make their trip to Costco worthwhile.”

It’s true. Every time I venture to Costco I normally have one product in mind that I need to pick-up. To find that in the warehouse takes time. In that time, there is much space to cover; space filled with unique goods and samples and odds and ends. Consequentially, by the time I hit the checkout line, I have a full cart.

I’m also considering grabbing a slice of pizza or a hot dog on the way out. Of course I go with the hot dog. I mean, who can beat a large soda and hot dog for a buck fifty?

See more posts in the following related categories: Brand loyalty costco Retail

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Costco might be my favorite place to shop, ever.

Sure, I’ve rattled on about Ikea, have praised the store concepts of Verizon and I believe retailers can copy the atmosphere of the Apple Store. But none of them hold a candle to Costco.

Please, tell me if I am alone with this. But I think not.

There is a rush with Costco like none other. The excitement comes with pulling out your membership card to be clicked into the warehouse, for instance. That rush, if you’re like me, is a little like the anticipation I had as a child Christmas morning. There is always something new (albeit, a lot of items I don’t really need) to pique my interest – and that thill of discovery is indeed just like getting a gift from Santa.

Costco and its model.

Costco

Costco membership has its advantages, both rational and emotional.

It begins with the membership. Actually, we should look at it differently than a membership. What we are really paying for is a kind of exclusivity. Membership can be a hurdle in some cases (like credit unions, but that’s because of other factors). Mostly, however, an emotional driver is being part of an exclusive club.

In this case, Costco promises lower prices (especially in bulk) but members have found that it offers loss leaders that give it some pizzaz.

Consider this from investopida.com:

“The biggest Costco loss leaders in America right now are rotisserie chicken, the hot dog & soda combo and gas. A Bloomberg article has calculated that Costco earns only $14 million in profit a year on its sale of 70 million chickens…These chickens, placed deep into the store along with the cheap fruits and vegetables, mean that customers have to walk through lots of merchandise to pick one up – and hopefully, along the way, they’ll grab some other products to make their trip to Costco worthwhile.”

It’s true. Every time I venture to Costco I normally have one product in mind that I need to pick-up. To find that in the warehouse takes time. In that time, there is much space to cover; space filled with unique goods and samples and odds and ends. Consequentially, by the time I hit the checkout line, I have a full cart. I’m also considering grabbing a slice of pizza or a hot dog on the way out.

Of course I go with the hot dog. I mean, who can beat a large soda and hot dog for a buck fifty?