13 Ways Costco Tricks You into Spending More Money
Shoppers flock to Costco for affordable one-stop shopping (not to mention those coveted food samples). However, if you find yourself leaving the warehouse store with more than you originally bargained for, you're not alone. Costco boasts some great deals but inevitably employs some retail tricks to encourage customers to spend more.
It often feels like Costco sells everything under the sun—after all, you can purchase everything from ice cream to tires there. But Kristin McGrath, editor and shopping expert at Offers.com, points out that you don’t get the same kind of brand diversity as you might at a typical grocery or drugstore. “Yes, maybe you’re getting a ‘good deal’ on, say, Dove shampoo by buying it in bulk,” says McGrath. “But you’re missing out on the chance to buy a more affordable brand, because Costco simply doesn’t carry it.”
If a shopper plays his or her cards right, one can make an entire meal out of Costco’s sampling stations. But, obviously, those aren’t set up as merely a perk for customers. “One of the best parts of Costco is the free-sample stations,” says McGrath. “But those can also be one of the most manipulative parts. If you like the tasty drink or appetizer they are serving and get influenced into impulse-purchasing it, you’re going to end up buying a bunch of it in bulk (because bulk is your only option) and spending a lot on something you didn’t plan to buy.”
You headed into Costco to stock up on eggs and cheese, yet you’re leaving with those things plus new bed pillows, a sweatshirt, and a blender. What gives? “One of the amazing things about Costco is the sheer variety of products available,” says Sara Skirboll, shopping and trends expert for Retail Me Not. “They have everything from bulk groceries to pool accessories to beauty products. Don’t allow yourself to wander down the aisles and get swept up in all the goodies. Keep your head down and head directly to the items you’re there to buy.”
TV or Not to TV?
The minute you step through the entrance, a parade of enticing electronics priced to sell are there to dazzle you, even if you’re not in the market for any new technology or gadgets. “You’ll often find discounted big-ticket items front and center right when you walk in, but I’d avoid any purchases that will quickly depreciate in value unless you really need it and can’t find a better deal somewhere else,” says Skirboll.
Dressed Down Decor
Costco isn’t exactly known for its eye-catching interiors, and there’s a reason for that. “Costco doesn’t use any fancy decor or lightning, instead, they make sure that their store resembles a warehouse with exposed beams, pallets, and simple metal shelving,” says Mark Ortiz, a marketing industry professional and founder of Reviewing This. “This is smart because it tricks the consumer into believing that they are purchasing goods at bottom low prices. Logically, you would think, less money spent on decor equals less overhead cost equals the opportunity to lower your prices.”
Supply and Demand
Costco rotates inventory to create a higher demand for certain products. “They might keep a specific product out for two days, and then pull it back into storage,” says Ortiz. “When other customers begin searching for this item, and can’t find it, they are informed that it’s ‘sold out.’ Those same customers are less likely to put off buying something next time around, just in case it is rotated out.”
“By getting customers to pay a membership fee, Costco subtly encourages them to spend each incremental dollar they spend with Costco instead of another retailer,” says Daniel Burstein, senior director of content and marketing at MECLABS Institute. “There are two psychological aspects at play here. One is cognitive dissonance—people struggle with having inconsistent thoughts. They want to believe they made good decisions. So in other words, if they bought a Costco membership because they believed it would save them money, now when they have a new purchase decision, they are more likely to buy from Costco.”
It doesn’t matter when you head to Costco, it’s always packed. This is great for business. “The typical Costco on a weekend day is an only slightly more subdued version of a Black Friday stampede,” says Burstein. “People are pack animals. We take our social cues from others. Since Costco has such a frenzied atmosphere with so many people buying so many things, we feel like we should be buying more.”
While generic house brands have long been considered low budget compared to name brand merchandise, Costco’s house brand Kirkland is known for its high quality. Burstein points out that Kirkland brand is often recommended by Consumer Reports. This is important to shoppers. “There is no trick in this,” he says. “Serve customers better than the competitor, put the customer first, and you will get a higher share of customer wallet.”
Sky High Buys
“Merchandise is staged to give a feeling of abundance,” says Burstein. “Much like we can feel guilty to take the last appetizer when eating dinner with a group, when we see abundance, our brain is cued to want more (think of a food buffet where people tend to eat much more than when ordering a specific meal). This isn’t unique to Costco, it is part of the warehouse model pioneered by Sol Price, founder of the Price Club. He called it, ‘Pile it high, and watch it fly.'”
Retailers have long made us believe that the more you buy, the more you save. This is sometimes true, but not always. “Their buy in bulk model makes you think you’re getting a great deal,” says Brian Sheehan, marketing and sales manager with Hollingsworth, a supply chain and logistics company. “They even list unit cost, which is better than most retailers. However, people do not take into account that sometimes they do not use everything they buy from Costco and stuff goes expired or to waste. I love their croissants but can never finish an entire tray in my two-person household.”
Dine and Dash
After you’ve stocked up on enough bulk items to last a good while, shoppers have the convenience of Costco’s quick-serve food options, like hot dogs and pizza. “Costco has a dining area where people can buy cheap food after they are done shopping,” says Sheehan. “This add-on is another cost to a visitors purchase. This is effective for families with children because it is an easy way to feed them.”
You’ve Got Mail
Costco loves themselves some mailable literature. Between their in-house magazine and coupon booklets, they publicize their offerings through the good, old-fashioned postal service, boasting monthly sales and deals to entice customers to come into the store. Sheehan admits these deals usually aren’t that great, but the reminder of all that Costco has to offer surely lures curious shoppers back.