At a divisive time when Americans are being battered by inflation, Costco’s commitment to low prices deserves praise from all political stripes.
Curiously, some Democrats still see Costco as a convenient scapegoat because they assume that “big” companies are automatically bad companies. At a recent hearing, Sen. Elizabeth Warren (Massachusetts) named Costco as one of the “big grocers and big food conglomerates” that are “ripping people off.” One of her witnesses, the owner of a Brooklyn Gourmet Market, misleadingly testified that the real problem is that Costco isn’t charging consumers the price. sufficient.
Last week, other left-leaning groups joined in the Costco bashing, accusing the company of “greedy” and “unnecessarily exploitative.”[ing] They believe that the company’s profits are so strong that it should lower its prices, making it unpopular with “American families.”
Now, if you’re blaming Costco for inflation, you’re probably missing the point. Costco is known for its low prices and has the lowest markups of any major retailer, according to Oliver Chen, managing director at TD Cowen. That’s why it has a cult following.
An economist recently sent me a photo of his family taking a photo at the entrance of a Costco shortly after his son was born. (“Costco has been with us all this time,” he explained.) Last year I attended a wedding where the bride and groom included Costco in their vows. (“I vow to push your wheelchair through Costco when you can no longer walk.”)
Those who know me well know that I’m one of Costco’s biggest stalwarts, in part because I’d crawl through glass for their rotisserie chicken (a juicy platter for just $4.99 is a cultural phenomenon in itself), but more broadly, I love Costco because it’s a marvel of capitalism.
This is the place where you can buy almost anything (in hilarious quantities) at high quality and shockingly low prices: sheet cakes for 96 people, 8-foot teddy bears, gold bars, coffins, giant inflatable sea serpents, Wagyu beef, a lifetime supply of string cheese, diamond earrings, an entire barn, etc.
One viral tweet reinterpreted the origin story as follows: “Costco founders: [drunk as hell] There will also be hot dogs and an eye doctor.”
Ah, yes, the legendary hot dog. It’s the star product, but it’s also symbolic of the value consumers get from shopping at the warehouse, and why Costco’s annual membership fee (which makes up most of the company’s profits because price increases on products are so small) is worth it. A Costco co-founder once told a CEO who proposed raising the price of hot dogs, “If you raise the price of a hot dog, I’ll kill you. Do something.”
Though Costco’s customer base skews higher, it’s diverse in other ways: Costco shoppers are disproportionately Asian and Hispanic, for example, according to consumer analytics firm Numerator. Costco is also beloved by immigrants, whose home countries often lack the abundance of the glittering goods that line Costco’s shelves.
The chain is “the epitome of the American Dream,” explains Numerator’s chief economist Leo Ferrer: “When my family immigrated to the U.S. from Brazil, we were in awe of Costco. When we had visitors from Brazil, they said they wanted to go to Disneyland and Costco.”
Costco, which ignored my request for an interview, has its limits. variety Product categories usually have only two or three options At the inner Within each category, you can choose a regular toaster or you can choose something a little fancier. You can buy a blue bath mat or you can buy a white bath mat.
Want a different model or color? Sorry, Costco isn’t the place for that.
For people like me, this limited selection is actually ideal. When I shop for anything, big or small, I tend to read all the reviews of every option before I allow the sheer number of choices to put me off making a purchase. But at Costco, I can leave my decisions in the hands of the store’s superior judgment. In any product category, Costco’s corporate shoppers ensure that products that are, say, in the 75th percentile for quality are selected at roughly the 25th percentile price.
The downside, of course, is that it forces consumers to buy everything in bulk, meaning if you live in a 650 square foot apartment, I’m not sure you’ll have the space for an entire “paper products corner.”
Besides its service to customers, Costco has also been praised for the way it treats its employees, which made it a favorite of Democratic politicians and a regular backdrop for photo ops for President Obama and Vice President Joe Biden. The warehouse supermarket was seen as a model corporate citizen because it treated its employees well while offering high wages and generous benefits. Somehow, the wholesale club became profitable and surprisingly popular — President Obama said in 2013 that it demonstrated the concept that treating employees well “is not only good for their business, but good for America.”
Sadly, those were simpler times, and in this time of constant national strife, I hope we can all come together and celebrate the American values that unite us all: the pursuit of a real good deal.
