Wholesale giant Costco consistently sells out of its stock of high-end luxury goods thanks to wealthy shoppers who ‘love a good deal’, bosses say.
Costco chairman Hamilton James points out that the majority of the store’s shoppers belong to the category of ‘average-income earners’ who are on the lookout for ‘higher-quality goods at lower prices’. Despite this target market, the retailer consistently replenishes its stock of luxury items.
James says affluent members who earn twice the average income allow Costco to ‘do remarkable things’.
In an interview with Chief Executive Magazine, James emphasized the company’s belief that quality products at competitive prices can be sold in large quantities. This strategy is evident in the availability of luxury items like Rolex watches, Dom Perignon champagne, and 10-karat diamonds.
James recalled a time when a Porsche dealer in Seattle put their cars inside a Costco, and they sold out within a week.
James also drew attention to the notable sales of gold at Costco, revealing that the store sells between $100 million and $200 million in gold bars each month. However, he expressed uncertainty regarding the buyer demographics for these gold purchases, questioning whether they are mainly affluent members or individuals concerned about the state of the economy.
Last year, Costco increased annual membership fees for the first time in seven years. The company also cracked down on cracked down on non-members trying to shop in its stores.
Wholesale-based retailer Costco routinely sells out of its stock of high-dollar, luxury goods thanks to ‘affluent people love a good deal’, the company’s chairman has revealed
Costco boss Hamilton James (pictured in 2017) claims that while most shoppers are ‘average-income earners’ in search of ‘higher-quality goods at lower prices’, the store is routinely replenishing its stock of luxury products
James argued that although Costco is a wholesale club, the retailer is ‘not interested in selling just anything at a low price’.
‘If someone wants to buy a $500 TV for $250 at Costco, we want to sell them a $1,000 TV for $500 instead. We’re always trying to find better items to sell to members, giving them a great deal,’ he explained.
He added that Costco is ‘by no means a dollar store’ and that the retailer does not ‘sell everything’, which he claims is a common misconception of non-members.
Costco has a ‘massive selection of 200 million items’, James said, but it’s product offerings are significantly less than the inventory of Walmart.
The chairman explained that Costco’s inventory includes 3,400 SKUs, whereas Walmart’s has over 120,000.
‘We’re by no means a dollar store,’ he added, noting that ‘at the same time, we’re always trying new things like gas stations, large products like appliances, pharmacies.’
Costco reported net sales of $19.51billion in January, a 9.2 per cent increase from last year.
Costco has a ‘massive selection of 200 million items’, James said, but it’s product offerings are significantly less than the inventory of Walmart. The chairman explained that Costco’s inventory includes 3,400 SKUs, whereas Walmart’s has over 120,000
Last year, Costco increased the cost of its annual memberships for the first time in seven years. The company also launched a crackdown on those trying to access its stores without a valid membership card
It comes after the warehouse-based retailer hikes membership fees in September 2024 for first time in 7 years.
The price of a standard membership rose by $5 a year, taking it from $60 to $65.
The Executive level – which offers a 2 per cent rebate on all Costco purchases made that year up to a total of $750 – Increased by $10 to $130 a year.
The changes, which affect members in the US and Canada, represent the first increase in fees since June 2017.
