Costo lost money without membership fees

[Mr Nice]

Originally Posted By: Vern_in_IL
Costco is a great place to shop partly because of the helpful and friendly employees. Costco pays them $20/hr plus benefits and treats them well on the job.


WalMart would be better off simply shutting down the Sam's Club stores as they will not make the changes needed to improve the Sams Club store, nor the WalMart stores for that matter.


Not everyone makes $20 an hour, they start around $11 an hour.
If you average the pay of pharmacist, managers and cashier / stock clerks the average is $20 an hour.

Costco has lots of part-time employees for one employee that is full-time. I have a family member that worked for Costco and it took about 3-4 years to become full-time since there are so many part-timers applying for few full-time positions.

You don't walk off the street and immediately start at $20 and hour and full-time.

 

[Andrew1972]

Originally Posted By: HTSS_TR
Originally Posted By: OneEyeJack
I purchased a Rolex watch for my wife from Costco about 10 years ago. I needed a link and called a local jeweler that carried the Rolex brand asking about adding the link. He asked me where I purchased it and after hearing it was Costco he said something I could not understand and hung up on me.

Did you talk to Costco about the link for Rolex watch ?

81 million paying members is a lot, this tell me Costco have very good customer service.


I cannot believe Rolex would degrade their luxury image and consider a horrid concrete floor store as avenue to sell watches.

 

[JHZR2]

Keep political commentary out of this thread, please.

 

[Danno]

I shop Costco about once a month. Great value on paper products and I find their meats (AAA) have the best consistent quality, which is hard to find locally. Most local stores carry AA meats.

 

[AuthorEditor]

Wish we had a Costco nearby. We do have BJs, but in general I find the prices there to be only so-so and often can be beaten at Walmart. BJs quality is generally good on products, but from what I hear Costco's stuff is better.

 

[KrisZ]

We shop at Costco as well. It's not too often, as the store is not near our house. You definitely cannot assume that everything is the cheapest, but they do have good deals. My wife is very good at knowing the prices for the household items and food and if they have a good deal, we stock up.

Also, from time to time they will have some good items pop in, that are not regularly on the shelves. For example, I recently picked up a 3 ton floor jack for a very good price from them. It is nothing fancy, regular, heavy, made from steel floor jack, but it looks very well made and heavy duty. It's better quality than similar floor jacks available from other local retailers.
I also recently noticed that they have a pretty good, everyday price on Castrol oils, although not a wide selection and only Castrol.

Their customer service and return policies are also fantastic in our stores.

 

[HerrStig]

Originally Posted By: madRiver
Originally Posted By: HTSS_TR
Originally Posted By: OneEyeJack
I purchased a Rolex watch for my wife from Costco about 10 years ago. I needed a link and called a local jeweler that carried the Rolex brand asking about adding the link. He asked me where I purchased it and after hearing it was Costco he said something I could not understand and hung up on me.

Did you talk to Costco about the link for Rolex watch ?

81 million paying members is a lot, this tell me Costco have very good customer service.


I cannot believe Rolex would degrade their luxury image and consider a horrid concrete floor store as avenue to sell watches.
Big deal, they buy their movements from the Swiss company which supplies TAG and other "high end" makers. What you pay for is the name on the case. In the car business they called "badge engineering".

 

[HerrStig]

So what's the REAL reason you're dumping on Costco? Consumers Union gives them high ratings, perhaps the best of the "club" stores. Do I care how they stay in the black if their prices are good and products better than average quality?

 

[4wheeldog]

Originally Posted By: HTSS_TR
Costco has 81 million members in 2015, Gold Star and Business members pay $55 a year, Executive members pay $110 a year. The minimum membership fee Costco take in last year was $4.455 billion (assume that no one was paying Executive membership fee of $110).

Quote:
For the fiscal year ending on Aug 31, 2012, the company's sales totaled $97.062 billion, with $1.709 billion net profit.


https://en.wikipedia.org/wiki/Costco

Assume that Costco had 30% less members in 2012 than 2015, 56.7 million member paid no less than $3.1 billion in membership fee in 2012.

This means Costco had operating lost of $1.4 billion in 2012.

Many items at Costco are much cheaper than anywhere else, Amazon included. The biggest saving is gasoline, usually Costco sells gas at 10-30 cents cheaper than other Top-Tier stations within 2-3 miles radius.


We have an executive membership at Costco. The yearly rebate on our purchased last year was almost exactly twice what the membership cost. Did you figure that into your model?

I buy tires almost exclusively from Costco....They are very competitive on price, and their road hazard warrantee is superior. I have had occasion to use it several times.

Plus.....I have never met an unhappy Costco employee. That says a bunch, right there. Clearly, a well run retailer, with very good prices.

Should you buy everything there? H$ll no. For example, I buy oil at Wallyworld. But they do what they do very well.

 

[TWG1572]

Originally Posted By: cashmoney
Costco's SOP is to provide high quality items at below average prices. Likely not a good solution for singles but for couples even with no kids the savings to be had over a year more than pay for the membership. I view Costco membership (assuming a person is lucky enough to have a Costco in their town) as a test of basic consumer intelligence.


This. My family has an Executive Membership and the check I get back every year covers the cost of the membership. It's a no brainer. The quality of their goods is high, and return policy is second to none. I had the sole on a one year old pair of winter boots separate a few months ago. With as little as I had worn them, it should not have done that. I walked in with the boots, no receipt, and got my money back no questions asked. Try that somewhere else.

Back to the OP. This isn't exactly breaking news. It's their business model.

 

[AuthorEditor]

Quote:
I walked in with the boots, no receipt, and got my money back no questions asked. Try that somewhere else.

LL Bean will take stuff back nearly forever I believe.

 

[gman2304]

I've heard that Best Buy and hhgregg make most of their profits from the warranties they sell. If so, it didn't work well for Circuitcity.

 

[linkbelt]

LL Bean will take stuff back nearly forever I believe. [/quote]

Not exactly, I tried to return a pair of "work" boots, (they were falling apart after very little wear). I was told by Bean that I had those boots for a long time and I should not expect them to last forever! I called a supervisor and explained that being 75 years old, I wore the "work" boots very little and the quality of these boots did not meet Bean standards.
I also advised the supervisor that we have been a customer for more than 30 years and I did not appreciate the way I was "blown off" by their "phone" person.

I got a full refund. I no longer buy from bean!

 

[dareo]

They only thing i hate about Costco is the crazy crowds of people there. They don't even open very early in the morning either.

 

[RooflessVW]

I don't do Sam's Club or BJ's or Costco. That style of shopping never really appealed to me.

If I want to save a buck, I buy online. If I want to have a good experience, I try to go to a locally owned business.

 

[Donald]

And what about BJs?

 

[4wheeldog]

Originally Posted By: gman2304


I've heard that Best Buy and hhgregg make most of their profits from the warranties they sell. If so, it didn't work well for Circuitcity.


I am personally responsible for making Circuit City go out of business. I bought the ONLY warranty I have ever bought, when I purchased a TV from them. They were out of business within 6 months.

 

[pottymouth]

Originally Posted By: Donald
And what about BJs?


I love 'em!

 

[HTSS_TR]

Originally Posted By: HTSS_TR
Originally Posted By: OneEyeJack
I purchased a Rolex watch for my wife from Costco about 10 years ago. I needed a link and called a local jeweler that carried the Rolex brand asking about adding the link. He asked me where I purchased it and after hearing it was Costco he said something I could not understand and hung up on me.
Did you talk to Costco about the link for Rolex watch ?

81 million paying members is a lot, this tell me Costco have very good customer service.

Originally Posted By: raytseng
I'm not sure what you're trying to get at here.
This is more about the local jeweler looking for a particular kind of customer who are price insensitive. He's probably had "costco" customers before and not worth his time for him to service them.

It would be the same as even if you are a millionaire, if you dressed shabbily and showed up at a trendy new york restaurant they may not serve you or if they do, rush you out, and for good reason, because your stature and behavior is unsaid communication that you are a cheapskate millionaire.

Originally Posted By: HTSS_TR
He bought his wife a Rolex watch from Costco, he needed a link for that watch for what-ever-reason, I just suggested contact Costco jewellery dept to see if they can provide anything.

Originally Posted By: OneEyeJack
I contacted Costco headquarters and they sent me to a local jeweler that took care of the link for free.

Raytseng, this is what I mean to post. I didn't say anything about the jeweler OneEyeJack contacted himself. I only asked if OneEyeJack contacted Costco for help.

Costco has very good customer service, they would do the best they can to assist their customers.

 

[HTSS_TR]

Originally Posted By: 4wheeldog
We have an executive membership at Costco. The yearly rebate on our purchased last year was almost exactly twice what the membership cost. Did you figure that into your model?

The yearly rebate was part of Costco expense, but I bet that not 100% members got their rebates every year. Some rebates got lost in the mail, some forgot to cash it at Costco. The bottom line is Costco made about 2% net profit, this means they don't overcharge most items they sell.

If you look at the details of rebate, some of transactions were not with Costco but AmEx issued only 1 rebate check and you cashed it at Costco, who pays for rebate of transactions outside Costco ? If Costco paid for it what did they get from AmEx ?