I am fairly confident that the founder of “Warehouse Style Shopping” never envisaged cool ipods or flat screen LCD TV’s or even 1 carat diamonds being sold as you walk in the front door of a vast warehouse store. It is an interesting experience to be handed a coupon booklet for diapers and Tylenol Cold Tablets as you walk in the door, walk by a few of the week’s specials piled up to 10 feet on your left and on your right see and hear the sounds of the latest, hippest electronics – not to mention being blinded by the” bling bling” also on display at the front. Oh, and you need a membership through a corporation to join and it costs $40-50 to join every year!
But it is Costco that has perfected the art and science of warehouse madness. The old style merchants would marvel at how the old traditional strategy of “pile it high and watch it fly” with large price point signs on each rack really does work in these environments. Did we mention the average household income as being around twice the national average? This, for sure, the founders never dreamed of or originally targeted: A very affluent core demographic.
I know there are large families out there who need three tons of dishwasher detergent at a time. I know in our household we go through 3-4 cases of the flavoured water in barely a month. I also know that to feed a family of five, the portions at Costco allow everyone to feel satisfied without breaking the bank or offending anyone’s taste buds.
So, when we mentioned that the Apple store was the “Perfect Retail Concept”, maybe we should think of Costco in the same breath. There is no floor service – it is fully self serve. There are no shopping bags or boxes – one gets to re-use the strangely shaped boxes in which the merchandise was delivered to Costco. The checkout is easy, quick and very efficient. There is no home delivery or help to load and unload the car (hence my back spasms on two occasions, two days after a Costco run). The stock is replenished and shipped overnight. There is no visual merchandising expense per se as the manufacturers’ own packaging and boxes are used to place on the floor always palletized. There are tastings set up around the store to help satisfy the munchies (which surely entices shoppers to purchase) especially after wandering around 100,000 square feet of concrete flooring. The cost and complexity to build are both extremely low and all the layouts are pretty standard and consistent. There is a built-in loyalty program and mailing list to which to advertise and promote and a built-in cash flow from the annual dues each member pays.
There is no internet expense or national advertising campaign. The employees are very well paid and committed. There seems to be less of a loss prevention issue as items are larger than average and hard to conceal and everything is checked as one walks out the door, by hand and in person. And they only take American Express. Imagine that.
I guess what I am saying is that I like Costco. I admire what they have done and the culture they have created. They do everything well at minimum cost so that they can pass along the best pricing possible to their “members” – that would be you and I. I have found golf bags, life jackets, hockey sticks, Sea Doo tubes to pull behind boats, athletic socks, children’s cotton pajamas, bestsellers in books and audio, patio and dock furniture not to mention the every day staples of bottled water, garbage bags, batteries, pine nuts and Chipits. Now, apparel is taking a larger and larger percent of their floor space and has succeeded based on price and need.
It is a one of kind treasure hunt experience that even guys like to visit. Oh, and they are needed because it usually takes more than one person to lift everything onto the cart and then into the car!