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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

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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