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Costco's average customer is definitely higher income than the average American, although I've seen different attempts to quantify this. The first result from a

Costco's average customer is definitely higher income than the average American, although I've seen different attempts to quantify this. The first result from a Google search gives me this: https://www.fool.com/investing/2016/06/17/who-is-costcos-favorite-customer.aspx https://www.fool.com/investing/2016/06/17/who-is-costcos-fav... A couple of factors act as a "filter" that makes Costco less worthwhile for lower income shoppers: - Buying in bulk requires a bunch of cash up front, which not everyone has. - Buying in bulk normally works best for families, and individuals with families have higher average incomes than those that don't. - Costco stocks almost exclusively mid- to high-quality food and products. Shoppers may be able to have a lower grocery bill by buying lower-quality store-brand products elsewhere. There are obviously individual exceptions, but these factors drive up the average income of a Costco shopper.

OldHand2018 8y ago
In Chicago a Costco membership is worth it just for the gas. It's usually at least 50 cents per gallon less expensive than nearby stations. I have no idea how they do that. Also, for new parents: you can easily save the cost of the membership on diapers and wipes for the year or so your child wears them. They always have a car parked in front or by the customer service center to advertise their auto purchase program. It has almost always been a Lexus, but for the past few months the one near me is a Maserati. I think this may be their signal on who their ideal customer is. Yet my parents used it to buy a Subaru and it was a good deal.
- xnyan 8y ago
  Costco makes ~75% of their profit from memberships, gas is like their iconic $5 rotisserie chicken - sell it at cost or a small loss as a incentive to buy and maintain membership. Gas prices are posted outside so it's a particularity public ad for costco membership and as such they have a strong incentive to push the price as low as feasible.
- jboy55 8y ago
  Costco loves the concept of price anchoring. That's why the diamond rings and tvs are right near the front, and their liquor isle has $1,000 bottles. The concept is that when you decide against buying the $1,000 thing, the $50 thing seems a good comprise. If all you had were $10 things, the $50 thing would seem to be 'too much'.
wil421 8y ago
People on food stamps can buy in bulk since they get a bulk distribution once a month but the $50 membership is likely a deal breaker for them.
dragonwriter 8y ago
> A couple of factors act as a "filter" that makes Costco less worthwhile for lower income shoppers: You missed a big one in many areas: buying in bulk requires facilities for storing inventory.
- dllthomas 8y ago
  With sufficiently stable social circles (also not available to everyone, but at least not an identical requirement) you could replace storage with distribution.
  - dragonwriter 8y ago
    Sure, but the poor are less likely to have stable social circles for shared purchases and distribution as well as less able to afford storage.
    - dllthomas 8y ago
      Certainly. I'd meant to imply as much.
wil421 8y ago
Thanks for the fool.com article it was a very interesting read.

OldHand2018 8y ago

In Chicago a Costco membership is worth it just for the gas. It's usually at least 50 cents per gallon less expensive than nearby stations. I have no idea how they do that. Also, for new parents: you can easily save the cost of the membership on diapers and wipes for the year or so your child wears them. They always have a car parked in front or by the customer service center to advertise their auto purchase program. It has almost always been a Lexus, but for the past few months the one near me is a Maserati. I think this may be their signal on who their ideal customer is. Yet my parents used it to buy a Subaru and it was a good deal.

xnyan 8y ago
Costco makes ~75% of their profit from memberships, gas is like their iconic $5 rotisserie chicken - sell it at cost or a small loss as a incentive to buy and maintain membership. Gas prices are posted outside so it's a particularity public ad for costco membership and as such they have a strong incentive to push the price as low as feasible.
jboy55 8y ago
Costco loves the concept of price anchoring. That's why the diamond rings and tvs are right near the front, and their liquor isle has $1,000 bottles. The concept is that when you decide against buying the $1,000 thing, the $50 thing seems a good comprise. If all you had were $10 things, the $50 thing would seem to be 'too much'.

wil421 8y ago

People on food stamps can buy in bulk since they get a bulk distribution once a month but the $50 membership is likely a deal breaker for them.

dragonwriter 8y ago

> A couple of factors act as a "filter" that makes Costco less worthwhile for lower income shoppers: You missed a big one in many areas: buying in bulk requires facilities for storing inventory.

dllthomas 8y ago
With sufficiently stable social circles (also not available to everyone, but at least not an identical requirement) you could replace storage with distribution.
- dragonwriter 8y ago
  Sure, but the poor are less likely to have stable social circles for shared purchases and distribution as well as less able to afford storage.
  - dllthomas 8y ago
    Certainly. I'd meant to imply as much.

wil421 8y ago

Thanks for the fool.com article it was a very interesting read.