A Change in Thinking

By Andy Hanacek, executive editor

I admit it. I’m a loyal member of Costco, amazed every time I go through the doors at what the retailer has managed to do. But that doesn’t mean I wasn’t skeptical at first.
In my world, when Wal-Mart opened its SuperCenters and I was introduced to Meijer’s similar format, I was pretty amazed — the idea of combining a department store (which is what we called the K-marts and Zayres of the world) with a grocery store seemed extremely progressive.
Heck, the sheer size of the stores themselves was impressive. But the idea of going to one store to meet most of your basic shopping needs made a lot of sense to me.
Enter Costco, stage right. I always perceived Costco with a “what’s the catch?” mentality. The thought being, if they’re selling these things in bulk for as low as they are, they must be unheard-of brands or subpar products, right?
However, since joining Costco more than a year ago, I’ve been converted, extremely impressed with their offerings, their business model and the way they treat their customers. I take issue with Costco investors’ occasional complaints that the company caters too much to its customers — there are things that Costco could change easily by spending a bit more, but they haven’t (the long checkout lines being one of them). So, investors, it’s not all peaches and cream for the customers.
Because of the quality it sells, Costco has completely changed the way I shop. I make about one to two trips to Costco a month, depending what I need. I don’t make a special trip to Costco if I need, say, a DVD or a new shirt. However, I bought a nice camera at Costco’s Web site because of the price and package offered, and I’ve bought other non-grocery and non-household items there too.
I wouldn’t even think of buying clothes at, say, a local Dominick’s or Jewel-Osco, even if they had a discount display rack right next to the frozen pizzas. It all comes back to trust and perceived quality.
Costco’s limited number of SKUs also creates a little bit of excitement for the average shopper, as well as some frustration. Yes, I was disappointed when I discovered that my local Costco had run out of the 36-pack of Crystal Light, which I only buy there because of the price. But, I find myself wondering what new items I might find each time I walk in the door. Costco’s Web site talks of creating a “Treasure Hunt” mentality, and I think they’ve done a great job of that. Heck, my colleague here at BNP Media, Debbie Cassell, editor of Confection & Snack Retailing, was practically bouncing off the walls with excitement during her first Costco “treasure hunt.” Then, she discovered that you could buy bulk vanilla and a host of other baking ingredients at pretty darned good prices, and it was over.
When you can create that type of excitement, as Costco has done, you certainly have a winning formula.