Catch my appearance on CNBCâ€™s â€œThe Costco Crazeâ€ Â which profiles this discount retailer for customers who donâ€™t need discountsÂ
Recently, I was asked to be a part of a CNBC special called â€œThe Costco Craze: Inside the Warehouse Giant,â€ premiering April 26th at 9 p.m. Â On the show I took correspondent Carl Quintanilla through a Costco store to share the tips and tricks that Costco uses to make their retail magic. The CNBC special is a timely one, because Costco can serve as a model for other retailers targeting the affluent consumers who nonetheless love a bargain.
Costco is the worldâ€™s largest membership warehouse chain, and it is one of the nationâ€™s top three retailers overall, and this success is not by accident.Â The special examines the many reasons that Costco is thriving in a post-recession economy.Â
Get Inspired >> The Discounter for Customers Who Donâ€™t Need Discounts
In Unity Marketing’sÂ research, we find that Costco is consistently the only discount retailer that attracts more ultra-affluent consumers (HHI > $250K) than lower-income shoppers (HHI $100k-$249.9k), and part of it is due to Costco’s “treasure hunt” environment. These affluent consumers are excited by the hunt for name-brand bargains. They will put up with long checkout lines and the big-box format in order to get access to such a wide variety of quality items at deeply-discountedÂ prices.
The fact is the affluent customers that Costco attracts are about the only ones in this economy that can afford to invest in a six-month supply of paper towels or toilet paper.Â Households on tight budgets can’t afford to tie up so much cash in stockpiling supplies.Â In addition Costco stocks many name brands and gourmet foods that appeal strongly to the wealthy.Â Â
Costcoâ€™s shoppers are absolutely addicted to the Costco experience â€“ They shop regularly and often in order to see whatâ€™s new, whatâ€™s on sale, whatâ€™s special
When it comes to attracting the affluent shoppers, it is all about the “80/20 Rule of Luxury Retail,” which holds that 80 percent of retail success is in the experience, with only 20 percent coming from product.Â Costco understands the experience its target shoppers crave. Â Their customer base is absolutely addicted to the Costco experience and they shop regularly and often to see what’s new.Â
Costco knows that its affluent consumers are likely to be small business owners who are acutely attuned to the mark-up that typically comes at high-end stores.Â Costco consciously strips away the frills that mean extra expense to these consumers and offers a bare-bones environment that says “savings.”Â The large format of the store also offers the ultimate in recreational shopping – no one goes to Costco to get just one thing, and often they walk out with a cart full of bargains.
Take Action>>Â Make Your Shop Pop!
Every retailer can’t become a discount Mecca like Costco, but every retailer can become a “shop that pops.”Â Costco fulfills all seven of the points in my retailer’sÂ ”Pop Equation:”
- Â Customer involvement and interaction - Costco shopping is a social experience. Â Nobody is a stranger in a Costco; you can stop another shopper in the store and they’ll be glad to tell you where they found something in their cart.Â And the hot dog stand is a great place to meet new friends.
- Curiosity – You can’t follow the race track when you shop at Costco; you have to go down this aisle, up the next and always browse the middle to see what’s on sale.Â Plus you’ve got to come back week-in, week-out to see what’s new and different.
- Contagious, electric quality – Have you ever seen an empty Costco parking lot?Â Costco is an attraction for shoppers in any local community.
- Convergence between atmosphere, store design, and merchandise – No frills mean no extra markup, so prices can be at their lowest.
- Authentic Concept – Costco really understands its customers and delivers an authentic experience.Â They have a well-publicized policy of never marking up products more than 15 percent.Â And they stand behind all their products with a iron-clad guarantee.
- Value Pricing – Enough said!
- Accessible environment – Costco is non-exclusive, even if they charge an annual fee to enjoy the experience.Â The fee of $55 is neither too high, nor too low either.Â
You can learn more about how to make some of the Costco magic work for you:Â
- Watch “The Costco Craze:Â Inside the Warehouse Giant” on April 26th at 9 p.m. on CNBC.
- Read my book: Shopping:Â Why We Love It and How Retailers Can Create the Ultimate Customer ExperienceÂ
- Call me (717-336-1600) to discuss a custom solution to make your shop pop!