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J. Kurt Roberts Costco is very successful — and unusual

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J. Kurt Roberts

Posted: Wednesday, June 8, 2011 12:00 am | Updated: 6:30 am, Wed Jun 8, 2011.

The Costco Wholesale Corp. opened its first warehouse in Seattle in September 1983, and has grown to now 585 locations worldwide, with the Lodi store's grand opening set for Thursday.

Costco has cultivated a well-earned image of supplying large families and small businesses with economy-sized packages of food, and other household and business necessities at, or near, rock-bottom prices. Costco also has been praised by many for its well-paying, union-scale jobs and benefit packages.

They are a true American success story, and deserve all of the accolades and praise that one may heap upon them.

As one who has been in the retail food industry for more than a quarter-century and has seen countless trends and gimmicks come and go, I can say without hesitation that they have achieved all of this success while incorporating what some believe to be a business model that is somewhat unconventional.

For starters, the store hours are a little puzzling. Being open only from 9:30 a.m. to 6 p.m. on Saturday and 10 a.m. to 6 p.m. on Sunday, "typically the two busiest days of the week," is virtually unheard of these days.

And how many retailers do you know of that actually charge $50 a year for the "privilege" of shopping there? While Costco is in no way an ordinary retailer, there are countless avenues that people can use to access goods these days. The Internet alone should, one would think, make one think twice about burdening a person with a yearly fee.

Some believe that the yearly fee is somewhat elitist, meant to keep out the "riff-raff." There just aren't that many poor folks out there willing to plop down half a C-note just to go shopping. In fact, Costco did not even accept EBT cards, aka food stamps, until June 2009, and then only due to the faltering economy.

Depending on the region, EBT cards, WIC vouchers and other social welfare-type programs can represent anywhere from 2 percent or less of a retailer's grocery sales, all the way up to 50 percent or more in some inner-city stores. Typically, electronic balance transfers of this type account for roughly 5 to 12 percent of a San Joaquin Valley outlet's gross grocery receipts. That, my friends, is a significant amount of money.

Of course, here in California the rules to shop without a membership are a little different. Due to a quirk in state law, Costco is obligated to waive the membership fee if all you're buying is alcohol, so if that's all you're buying, you will be allowed through the doors. The same goes if you want to use the pharmacy.

And if you're thinking about putting all those purchases on your Visa or MasterCard, better think again. Costco has an exclusive relationship with American Express and does not accept any other charge cards. But in this day and age most credit cards are dual-use debit cards, so that shouldn't be too much of a problem for most of us.

Without a doubt, Costco is a welcome addition to the city of Lodi. The sales tax revenue it will bring is welcome now more than ever, and with Costco's position as the nation's, if not the world's, largest wine retailer, well, it's hard to believe it took this long for them to open here!

And if the food court deals are as good as they are at other locations, well, that just might be worth the $50 yearly membership right there!

J. Kurt Roberts can be reached at jkurtroberts@att.net.

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Welcome to the discussion.

15 comments:

  • Kim Lee posted at 10:31 pm on Thu, Jun 16, 2011.

    Kim Lee Posts: 1798

    Joanne Bobin wrote, "My biggest problem with Costco USED to be that my kids would love some type of food item until I bought a year's supply at Costco at a really cheap price. They would suddenly lose interest and I'd end up throwing it out after a couple of months."

    Joanne Bobin: What item did you buy for your kids that was a year's supply? Just curious. I like Costco, and have a large family, but have never purchased a year supply of anything.

     
  • Brian Dockter posted at 8:31 am on Sun, Jun 12, 2011.

    Brian Dockter Posts: 2830

    There are Sam's Clubs in the Sacramento area. Anyone in the Lodi area been to Sam's Club?

     
  • Brian Dockter posted at 8:26 am on Sun, Jun 12, 2011.

    Brian Dockter Posts: 2830

    My family and I went to Sam's Club here in Phoenix for the first time in quite a while and we found prices on similar items generally lower. We are going to renew our membership at Sam's Club so we have both to choose from.

     
  • Doug Chaney posted at 5:37 pm on Sat, Jun 11, 2011.

    Doug Chaney Posts: 1232

    Bob, the goal zero unit was an eighty watt unit and the solar panel was 15 watts. Charges in 4 1/2 hours on AC and 24 hours with one 15 watt solar panel. They sold at Costco in Stockton for $199 for the unit and accessories and $99 for the solar panel and we bought two light accessories for $39 each. Costco had a special vendor on the floor selling those $725 units at a great discount.

     
  • Bob Smith posted at 12:20 pm on Fri, Jun 10, 2011.

    Bob Smith Posts: 128

    Jerome, they don't show it online. At the Stockton store last week they had a 55-watt solar panel kit similar to this one at Walmart: http://www.walmart.com/ip/Coleman-55W-Solar-Back-Up-Kit/15063160. $299.00
    You can get 120W panels on eBay for the same price, and 45W kits at Harbor Freight are only $169.00.

     
  • Jerome Kinderman posted at 9:55 am on Fri, Jun 10, 2011.

    Jerome R Kinderman Posts: 2350

    Mr. Smith, re: your post at 11:19 p.m. on Wednesday, Jun 8, 2011 - what "55 watt model" are you talking about?

     
  • Joanne Bobin posted at 5:55 am on Fri, Jun 10, 2011.

    Joanne Bobin Posts: 4488

    Costco is just like any other store - you REALLY have to know your prices on products or you will end up paying the same or more for stuff that will go stale before you can use it all - unless you have half-a-dozen kids to feed... I wouldn't, by any stretch of the imagination call their prices "rock-bottom."

    Comparison-wise, I have found lately that Target has many better buys on "personal care" products and laundry stuff than both WalMart and Costco.

    My biggest problem with Costco USED to be that my kids would love some type of food item until I bought a year's supply at Costco at a really cheap price. They would suddenly lose interest and I'd end up throwing it out after a couple of months.

    Good comments, Mr. Chaney, on the traffic situation at that location. It'll be interesting to see if a good solution for that intersection (Frontage Road & Harney) is reached.

     
  • Brian Dockter posted at 7:41 am on Thu, Jun 9, 2011.

    Brian Dockter Posts: 2830

    Doug,

    I couldn't agree with you more about the need for an underpass at the tracks on Harney. And, of course we are long pass four lanes on 12. This artery to the delta and beyond is so significant one wonders what the powers to be are waiting for.
    Let's get the tractors rolling. I liken this to when there was the gap in I-5 from around Stockton to somewhere south of Sacramento in the 70's. I wouldn't be surprised if it's the same organization of farmers and environmentalists leading the charge to hasten the expansion of 12.

     
  • Bob Smith posted at 11:19 pm on Wed, Jun 8, 2011.

    Bob Smith Posts: 128

    The 55 watt model? You got robbed. But hey, as long as you like it.

     
  • Doug Chaney posted at 8:52 pm on Wed, Jun 8, 2011.

    Doug Chaney Posts: 1232

    Love Costco, but my wife always stocks up. $778 two weeks ago. But did purchase a nice portable solar package for the real wilderness, saving over $200 from the manufacturers' price. Luckily and wisely, I own all of my possessions and have no debt obligations to hold me back from letting go at Costco. I've been a member since the 70's in Oregon. I don't relish the massive traffic tie ups that will be commonplace until developer Gillespie installs traffic signals, creates and over/underpass for the railroad tracks and converts those old farm roads to four lane expressways. But then, won't our MeasureK road funding again take care of the traffic mess there while the slaughter continues on forgotten Highway 12 from Lodi to Suisun City?

     
  • Sam Heller posted at 5:05 pm on Wed, Jun 8, 2011.

    Sam Heller Posts: 176

    Charles, I am with you. I LOVE Costco. I spend $300 plus every 2 weeks there. I am so glad Lodi will now benefit from my passion.

     
  • Kevin Paglia posted at 4:44 pm on Wed, Jun 8, 2011.

    Kevin Paglia Posts: 2020

    The key to leaving Costco with your budget intact is to go with a list and stick to it. My average trip to Costco is under $100.

     
  • Josh Morgan posted at 3:07 pm on Wed, Jun 8, 2011.

    Josh Morgan Posts: 532

    Charles.....you're absolutely right. I don't think I leave that store without at least a $150.00 receipt. I've got enough cereal to get me through the end of the year.

     
  • Charles Nelson posted at 8:51 am on Wed, Jun 8, 2011.

    Charles Nelson Posts: 259

    Why do I get the feeling that despite their rock bottom prices, I'm somehow going to be poorer by their moving to a more convenient distance from me? I love that store.

     
  • Brian Dockter posted at 7:57 am on Wed, Jun 8, 2011.

    Brian Dockter Posts: 2830

    Kurt,

    Thanks for the insight and sarcasm all wrapped up in one package.

     

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