Understanding the Costco Shopping Experience

Jan 25, 2025

Costco Overview

  • Costco Very Berry with extra berries and king crab legs.
  • Some customers are highly loyal to Costco; described as addicted to it.

Costco Experience

  • Stores are characterized by large sizes (carts, warehouses, products).
  • Designed for efficiency (forklift trucks and shoppers).
  • Experience emphasizes scale, has been consistent for 30 years.

Treasure Hunting

  • Products are strategically placed to encourage exploration.
  • Staples like milk and eggs are placed far back in the store.
  • "Treasure hunting" encourages impulse buying; shoppers discover more products.
  • Shoppers often exceed their planned spending amounts (e.g., $25 to $700).

Membership Loyalty

  • Average transaction amounts range from $130 to $140.
  • High member retention rate: 90% renew their memberships.
  • Frequent visits: Some members go three to four times a week.

Shopping Environment

  • Frictionless shopping experience with wide aisles and minimal signage.
  • Free samples encourage spending; some humorous anecdotes about shopping experiences.

Food Court & In-House Brands

  • Popular food court with items like the $1.50 hot dog combo.
  • Kirkland Signature brand offers beloved products (e.g., paper goods, olive oil).
  • Costco also sells luxury items (e.g., engagement rings).

Target Consumer

  • Focus on the affluent baby boomer generation, controlling a significant wealth share.
  • Customers often buy a wide range of products over time, creating an ecosystem.

Brand Values

  • Key attributes of Costco: value, quality, and consistency.
  • Members feel they save money on high-quality products.

Wine and Spirits

  • Costco is a leading seller of fine wine and spirits in North America.
  • Offers both high-end and value-friendly wines.

Profitability Model

  • Operates with a limited assortment of 4,000 items for efficiency.
  • Efficient logistics allow for low working capital needs.
  • Strong relationships with suppliers keep operational costs low.

Golden Rule Philosophy

  • Treating suppliers and employees well leads to customer satisfaction and profits.

Competition with Amazon

  • Costco remains competitive against Amazon; often better prices.
  • Physical presence and ease of picking up items are future retail trends.

Sustainability Efforts

  • Costco leads in sustainable seafood initiatives.
  • Need for improved plastic use and waste reduction strategies.

Conclusion

  • Despite criticisms, Costco's appeal lies in offering good deals, leading to loyal customers.