The REAL Reason Why People LOVE Costco

By now, you know that we really love a good deal (especially when it comes to Disney). For that reason, lots of people on our team have really grown an affinity for big-box stores like Costco, which often have great deals not only on food and merchandise but also on travel, gift cards, and other vacation essentials.

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While we might not all do our everyday shopping here, these wholesale memberships come in quite handy for Disney deals and gift card offers that could save us TONS. But, we’re not the only ones that have a love for Costco! Let’s take a deeper dive into why people are obsessed with this retailer.

With prices rising for nearly everything nationwide, it’s nice to have the comfort of one retail outlet that remains steady. For decades, Costco has maintained loyal customers, employees, and shareholders with its seemingly basic business model. So what really keeps everyone coming back to Costco year after year?

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For starters, it’s important to know the scale of the store that we’re talking about. According to an article in The Economist, “Costco is the world’s third-biggest retailer, behind Walmart and Amazon.” The article also goes on to point out that Costco’s sales are “less than half of Walmart’s” but Costco’s “return on capital, at nearly 20%, is more than twice as high.”

Costco has even been referred to by famed investors who’ve personally served on its board as a perfectly run company. Richard Galanti served as the finance boss for Costco until he retired earlier this month and said the retailer knows how to hook shoppers simply by offering high-quality products at the lowest price possible.

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Costco achieves this by keeping markups on their products low and making up the difference by charging an annual membership fee to those who shop in their stores. In 2023, Costco netted more than half its operating profits solely through its annual fees charged to over 129 million members.

This membership works in an almost symbiotic relationship, according to finance analysts, where customers are encouraged to continue shopping at Costco rather than shopping around, and in return the massive retailer is able to count on incoming memberships to better their relationships with suppliers delivering products that consumers really want.

Food at Costco

Costco also focuses on stocking fewer products in its inventory. This gives the retail giant more bargaining power when they go to buy more quantities of a product from supplies (which keeps those suppliers happy too by the way)! Costco’s own brand, Kirkland Signature, also accounts for over a quarter of its total sales which shows that customers have learned to lean into the brand that they’ve established trust with.

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Costco has reported an 8% employee turnover rate which is very impressive considering the national average is 20%. But Costco also pays its employees well. Employee pay at Costco is higher than the industry average, and combining that with opportunity for growth within their careers, generous medical insurance, and retirement coverage, it’s easy to see why many employees have continued to stay working with Costco for over a decade. Most of Costco’s executive team has come from internal promotion and long-term tenure with the company, too!

When you take a deeper look inside, it’s really not hard to see why so many people have so many fond feelings and associations with the Costco name and brand.

We’re always looking at great places for deals and savings, so be sure to stay tuned with us for more deals as we spot them!