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THE COSTCO WAREHOUSE: BIG PRODUCTS,
BIG SAVINGS, BIG FUN
By Christina Guzzo
Imagine an industrial sized shopping cart filled with gigantic boxes of cereal, gallon jugs of olive oil, a tub of mustard, and a state of the art plasma television.
If it sounds absurd, it ‘s because it is. But that, my consumer friend, is the pure genius behind the Costco discount warehouse store.
Even in the ailing economy that faces today’s retailers, the super store that sells everything from automobiles to heads of lettuce, is staying on top with consumers. With over 300 locations across the United States, Costco’s sales impressively reached $ 40 billion last year. Surpassing its competitors, Wal-Mart’s Sam’s Club and the B.J.’s warehouse chain, Costco’s sales tactics have proven successful among consumers.
But what is it that separates Costco warehouse stores from the others? Although personnel at several area Costco stores declined any kind of interview or comment, satisfied customers who know the store best talk of fun, low prices, and convenience.
Edward Dalton, a music teacher from Cranford, NJ, often finds himself having a good time shopping at his local Costco store in Wayne, NJ.
“I really like going there,” Dalton stated. “ Every time I make a trip for something specific, I always wind up spending hours there and I come back with things I just couldn’t help buying. Sometimes the deals are so good there that you just can’t pass them up.”
The section of computers, stereos, and televisions that customers can try out, the numerous stations of free product samples, and the surprising deals on high-end name brand products make shopping at Costco somewhat of an adventure. Even though Costco is America’s No. 3 grocer, a trip there is nothing like going to an ordinary supermarket.
Patricia Brislin, a receptionist from Paramus, NJ, likes to shop Costco’s aisles searching for good deals on expensive things.
“I buy a lot of wine there.” Explains Brislin. “It’s so cheap, it’s hard not to be tempted. Also, I try to cut corners buy buying the expensive things my family needs there, like electronics, hardcover books, and even sometimes jewelry. It is really nice having everything I need in one spot.”
With no advertising and no Public relations department, Costco stores rely solely on their good deals and devoted customers to bring in new members.
A one-year membership card for Costco runs about $45, but consumers like Joseph Potente, a speech therapist from Ringwood, NJ, believes that the fee is well worth it.
“I buy everything at Costco,” Potente said. “It’s great. I can do all my shopping in one place. Our refrigerator and almost everything in it is from Costco. You really just can’t find another store that has so many things for so less under one roof.”
Even during March’s war in Iraq, when most retailers were feeling the blow wartimes can bring, Costco’s sales that month were up 8 percent from a year ago. When things were looking grim for America, people wanted to shop less, but look harder for low prices at warehouse stores like Costco.
Lisa Ferrara, a physician and mother of three from Rivervale, NJ shops at Costco to save money.
“I had been saving for months to buy my children a nice swing set for the summer, “ recalled Ferarra. “ I shopped around at other stores and I never had enough money, so I had to save more. Finally, a friend told me to go to Costco and I got a beautiful swing set for a third of what I had saved, and I got to spend the rest of the money on other things.”
But why does Costco seem to have better deals than any other retailer? MSN Money Insight reporter Mike Robbins wrote that Costco could keep its prices down because of the way they stock their warehouses.
“ For example, the firm actually stocks only around 4,000 different items per store, “ explained Robbins. “ Buying fewer products in larger quantities not only means better deals for Costco, it also means lower employee costs.”
Not only are there low prices on items that you need, but there are also low prices on those items that you may not. More expensive name-brand items such as handbags or stereos attract customers that are in the store shopping for other things. These items are bought on impulse, usually, because they are discounted way below regular department store prices.
John Sinegal, the CEO of Costco who started this business over 20 years ago, created a store with a perfect balance of low-end and high-end products.
“We try to create a sense of urgency,” Sinegal explained in a recent Newsweek article. “So, if people see it, they’d better buy it.”
With only 306 locations nationwide in only 28 states, Costco has set up a strong foundation to build more stores on. Mainly on the East and West Coasts, Costco is ready to infiltrate into the lives of Middle-America consumers.