This is only me, but I couldn't help but thinking, how much of my money have they lost because of their membership rules? Are there many people like me that got turned off by that?
They came in with a bang, big savings but you had to buy large volumes. I couldn't justify paying a fee then having to buy massive amounts at that time. Since then other stores compete fairly well with smaller volumes and that's just the habit I've gotten into.
Thoughts on this?
Profit Margin:
COST 1.81%
TGT 2.59%
WMT 3.32%
So, profit maybe yes, but look at Costco's earnings growth and return on equity and you would come to a different conclusion. Costco members are very loyal partly because of the membership fee. Loyalty then drives growth and earnings which are typically more important than profit.
If I save $400 a year on gas and my Costco membership fee is $100, I don't see the problem. Just because gas is a few cents cheaper at the pump doesn't necessarily mean it's magically inferior too.
Given a local Walmart and Costco within yards of each other, I choose Costco for discounted things I need in somewhat larger volume and Walmart for anything Costco doesn't carry, assuming I'm not shopping for anything of substantial quality.
The membership cost is saved at their gas pump alone. Locally nobody matches or beats them. "Large quantities" applies to some dry goods but not excessive elsewhere. A gallon of their milk is usually about $3.00 vs $4.00. Frankly, you are the one spending excess money not Costco missing your membership dues.
No, costco is not losing profit. People save on gas and a lot of other stuff. They also get great customer service and food.
