May 9, 2012 smz-blog

Addicted to Costco

– John Gielow, Director of Digital Strategy

For me it all started with my first child.  The sticker shock for baby formula sent me looking elsewhere than my local grocery store.  Nearly 15 years later I continue to make the bi-monthly pilgrimage to the warehouse with carts large enough to fit a family of four and a big screen TV.

CNBC’s Costco Craze aired this past week and really surprised this seasoned Costco shopper with some incredible facts:

  • Annual wine sales have now approached $1 billion—one of the largest in North America
  • Only stock about 4,000 items, compared to nearly 40,000 in an average grocery store
  • Can still buy a hot dog and soda for $1.50 … still the same price as 1985

Costco’s 64 million members not only crave the free samples and the 12-gallon containers of mayo, they pay Costco for the right to walk through their doors to the tune of $55 to $110/year.

I admittedly purchase more than I plan to with each trip to Costco and I believe it’s not just because of the large quantities and pricing—product markups are never more than 15%.  It’s the entire package.  How they look out for their customers and take care of their own employees.

What can other retailers learn from this hugely successful business?

Costco takes the guesswork out of what to buy by not forcing me to decide between 20 different options of the same thing.  They stock quality products across all product lines I know are going to be priced fairly.  And each trip turns into a surprise as they seem to always have new products featured that month you may have never seen before.

And, I must admit, the free samples can sure come in handy if you haven’t had lunch yet.

Comments (4)

  1. alex

    My name is Alex and I am addicted to Costco.
    John Gielow is not helping…he is adding to my problem with this article!
    (But his daughter is super cute!)
    Fun post John.

  2. SMZ

    Alex, good to know I’m not alone. Building passion for brands sure pays off. Enjoy those free samples.

  3. Ashley R

    Did you know that anything that ends in “.97” is on clearance! My dad and I comb the aisles looking for the clearance items. One time we found an bakery size bag of brown sugar (like 10lbs) for $1.97!

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