Costco Craze: CNBC Highlights The Country's Top Warehouse Club Chain

Since Costco came on the scene in 1983, it has grown into the largest membership warehouse club chain in the U.S. A new business documentary by CNBC that first aired Thursday night profiles the retailer and the consumer "craze" it's ignited.

Nearly 90 percent of Costco customers renew their memberships yearly, each time for between $55 and $110. Costco breaks even on most of what they sell, which means that most profits come from membership fees -- roughly $1.5 billion a year.

Products are sold at bargain-basement prices, which is the main reason they're not money-makers. Costco has to sell tons of them to keep the model viable, so the store is designed to boost a customer's willingness to spend.

In an accompanying article, CNBC speaks with Cornell University professor Brian Wansink, an expert on consumer behavior.

“Shopping at a warehouse club gives us license to spend like we otherwise wouldn’t if we were in a normal store. We are motivated to save money, we are motivated to recoup our membership fee, and as a result, we might even end up spending a bit more.”

Popular food items sold at Costco include cashews (the retailer snatches up half the world's supply of the most popular kind) and salmon. Also big with consumers: The hotdog and soda combo for $1.50 in its accompanying food court. About 100 million of them are sold a year.

Click through the slideshow for more interesting facts about Costco.

Comments

[Grandma Fifi]

09:09 AM on 05/13/2013

My blog (grandmafifi.com) is devoted to Costco.

I do almost all my shopping of every type there.

[axt113]

10:09 PM on 05/06/2012

I use Costco to buy things that I will use for months and months, like dishwasher and laundry detergent and paper towels

[streettalk]

09:54 PM on 05/03/2012

costco and lots to be a member, but are they charging for this mad cow decieese i dont think i need it am mad already haha.

[bob40wil]

04:05 PM on 05/03/2012

When my youngest was living in Kirkliston Scotland there was a Costco close by her, they sold all the things we get here but can't find in regular stores over there, peanut butter being an example. There is peanut butter to be had over there in regular stores but nothing like Skippy or other brand names.

[Alena Dillon]

03:02 PM on 05/02/2012

For those interested in another similar article:
http://thetimeiswrite.com/2012/04/17/costco-or-why-i-might-be-on-a-terrorist-watch-list/

[ChicagoBob]

01:11 AM on 05/02/2012

Costco sells value.

I am not now living near a Costco. I really miss it.

[greenalva]

08:51 PM on 04/30/2012

i'm not exactly sure what this article is about or why it made the news.

[MaxHeadroom]

10:32 PM on 05/01/2012

Then why comment on something you didn't care to read, or understand anyways?

Just asking....

[KenValpojd]

07:20 PM on 04/30/2012

The Costco products tend to be cheaper than at full-price supermarkets--Jewel, Dominick's, Stop & Shop--but more expensive than products at discount supermarkets--Aldi, Shop & Save. On the other hand, the quality of the meat at Costco is well ahead of that at the discount markets, and there are many things Costco sells that aren't in the discount markets. (If you're in the Chicago area, Shop & Save's prices are good, and they carry an unbelievable assortment of European and Middle Eastern products.)

[Uhhhhdel]

06:29 PM on 04/30/2012

Costco is the best. We make up our menbership fee with the year end rebate they give us. We spend $100 for the membership and get back about $200 from the year end rebate. They have really good quality meat, paper products, the best strawberries I have ever had, and generally low prices on everything in the store. We cut out our grocery store except for maybe $20 to $30 worth of stuff every week or so. I also have a Sam's Club membership that my mom has me on (it is a business account) and we hardly ever go into it since the quality is so much better at Costco. Keep up the great work.

[rnl52]

01:09 AM on 05/02/2012

Not to mention their tuna is the VERY BEST!

[aroundthetown]

06:19 PM on 04/30/2012

This article is not accurate at all. Costco doesn't sell and lose money. Many items, especially grocery, you can buy cheaper at the market in quantities that don't go bad before use. New DVD and Blue Rays are higher at Costco than any other store when they come out. There are good prices on many items at Costco, but not all and you have to check clearly and do your homework.

You make an inacurate argument for Cashews - as an example which is absurd!. 2 years ago, Cashews at Costco were in 3 pound containers and cost $9.99. Approx a year ago, they went to $11.99 and went down in size from 3 pounds to 2.5 pounds, but the container looked the same-so people continued to buy thinking it was the same. Last year the price skyrocketed to $14.99. So in 2 years, a decrease in quantity of 1/2 pound per container and an increase in higher cost by 50%. The change in container was about reducing the amount by 1/2 a pound and not trucking. So in actuality, this product went up almost 70% in cost to the consumer. Check it out - a reduction from 3 lbs to 2.5 lbs in quantity and an increase in cost from $9.99 to $14.99. You do the math!!!!!

Consumers need to stay savy on pricing and games food companies are playing with container size changes, reductions in quantity, and marketing techniques. Don't be misled!

[guacamolem]

06:07 PM on 04/30/2012

Costco, Sams, Walmart, etc. Sell ANYTHING we need, right? They also sell coffins & urns. Isn't that a nice way to send off the departed? "Our grandfather was a generous man. He nerver said no to anyone & he gave us what we needed. He even ensured that our grandmother, all of his children, grandchildren, & great-grandchildren would each recieve $20 million upon his death. He loved us all So we now lay him to rest in this coffin from Walmart that was by the pickles." Or, "We feel for you in this time of loss Mrs. Nielson. Your husband truely loved you. Though it may not be at this moment, you'll be comforted to know that he left you the houses in Malibu & the Virgin Islands, a 2000 acre ranch & a stable of champion Andalusian horses, an extremely profitable investement portfolio, & I have been informed that your husband is the last of a distant Norweigian family & since he has died, the King of Norway has confered the title of Count of Trondheim on your son & Dowager Countess on you. That's not all, your husband also wanted you to have the twisty-tie ring you gave him when you made rings for eachother as teenagers. He said it was his most treasured possession. Now Mrs. Neilson, here are your husbands remains in the urn you bought for him at Costco, & since you bought during their two for one sale, here is your other urn." Does

[Uhhhhdel]

06:30 PM on 04/30/2012

Kind of a stretch to make a point isnt it?

[cct]

06:00 PM on 04/30/2012

I have to admit I am hooked. No product is truly bad though their bakery is pretty horrible. Great cheese selection at amazing prices. Good fish. Very good meats.

I've observed that their high quality products have become less available since the economic recession however. At my costco I cannot find organic eggs, good Irish butter and other products I used to enjoy very much.

[electros]

05:37 PM on 04/30/2012

I love the yellow smiley faces on all the best deals its so easy to spot those good deals that way.

[Yam716]

04:54 PM on 05/01/2012

I thought that was Sam's Club that used the yellow smiley faces...

[stevetrueheart]

05:33 PM on 04/30/2012

I too love shopping at Costco. Over a few short months at my beginning with Costco, I developed a list of items to buy there. Some items, like fresh vegetables and frutis, I must be careful about as we do not consume those fast enough and the residual can go bad. But the vast majority of items, including their quality meats, we buy in bulk, repackaging and freezing into smaller individual servings where necessary. This place works for me, and works quite well.

[oceanblues1a1]

05:31 PM on 04/30/2012

Costco emploees are by far the highest paid in the industry also w/ full healthcare coverage!

[Seattlewkr]

05:51 PM on 04/30/2012

Highest paid in what industry? What store's like Costco?

[MaxHeadroom]

10:27 PM on 05/01/2012

Retail, genius.