Shopping at Costco is like going back to university and lining up for everything. And you are treated like a child by having to show your passport when you enter and your bill when you leave!
I can assure you that your annual fees are a waste of your money and a cash bonanza for them generating $600M or more each and every year from those too lazy to do the math. Or feel that their fees are paid for by grazing on all of the samples.
Having worked at Kraft and having introduced a $100M business from my desk in Toronto, I was rewarded and ultimately forced my exit package when I was advised my next assignment was to be the marketer on this highly unprofitable and unethical account. But this is not the thrust of this article. I, as a very successful and astute New Products marketer, saw right through the lack of profitability with them and I want you to see and save as a consumer and marketer as I do.
Not 1 single item I purchase over the course of a month is cheaper in Costco. AND I do not have to purchase insane quantities, hence the SUPERSIZED grocery carts, for everything including toilet paper or paper towels that together overwhelm the Garbage truck sized grocery carts including those 10′ long flatbeds.
But oh you say I do not want to go to all of the other retailers every week! You do not have to, take your flyers to No Frills and they will honor those prices.
Oh and those SAMPLES that you get and have no real idea what you are eating, but just doing so because you have given them $600 million each and every year. Remember this is NO FREE lunch.
Costco makes back 10 fold on a program they mandate of manufacturers, so they do not pay for it. But more importantly, this is actually a dual profit center for them, as you feel good being fed and as a result, your bill ranges from 2-10 times the amount you would in a regular Supermarket.
Begin doing the math as I have and you will see NOTHING is cheaper. How can this be? Well, they do not negotiate any cheaper prices, they actually make the manufacturers spend significantly greater sums of money for COSTCO exclusive packaging and take the size up 3-4 fold so that it feels like it is cheaper.
They tell manufacturers that Store X sells for this price, so on a per gram basis, so you will sell it to us for this price, you will pay for that sampling program, supply all the free sample product and those people behind the booths (who by the way work for us) will not give YOUR potential customers any reason to purchase the product, so that they can change out your product for the next shiny object.
What a waste of time, energy and money to shop at Costco! They are not better value across 98% of their categories, they just through sleight of hand you by making comparisons impossible without a photographic memory and a calculator.
A simple example sees you enter the store expecting to spend $20 but with samples and perceived discounts, you spend $100.
So their 15% margin nets them a minimum of $15.00 where a traditional supermarket would have made $3.30 on the shopping visit. Oh, and you gave them $4 each and every month for the privilege.
Stop wasting your time and money and buy at your local regular size Supermarket (No Frills), frequent your local butcher and greengrocer and see for yourself. Quality beats Quantity every time.