Very Berry with extra berries.

We came for pumpkin pie, actually.

And the king crab legs.

I think some of their customer base is absolutely

addicted to Costco.

Welcome to Costco where everything is huge and

it's been like this for 30 years.

From the carts to the warehouses to the products

themselves. It's a store fit for giants.

It's designed as much for a forklift truck as it

is for people.

That sense of scale is part of what the Costco

experience and the warehouse experience is all

about.

And Costco has made billions in revenue from

its no frills model significantly more than its

U.S. competitors.

Nothing in a store is placed by accident.

Take for instance staples like milk and eggs.

You have to travel all this way just to find the

dairy. This leads to something Costco calls

"treasure hunting."

The more you see, the more you discover, the more

you end up putting in your cart.

You end up buying other things you probably don't

really need.

You almost have to go in with blinders on and

walk right past the things that you are tempted

to buy.

But buying in bulk isn't for everyone.

For me personally it would be a waste of money to

get a Costco membership because I can't use up 25

pounds of flour or, you know, some of the really

big bulk items.

It just isn't worth it for me.

The average Costco transaction is between

$130 and $140. But members have been known to

spend much more.

I thought I would spend about $25.

And I ended up spending over $700.

$187.65.

$221 and change. You can come in here and spend

about $250, $300 easy.

They have a very loyal membership base.

Ninety percent of their members renew their

membership.

Being a wholesale club member comes at a price.

The interesting thing about Costco is that when

you speak to a consumer, they go quite

frequently.

And I have spoken to people that go and drop into

a Costco three, four times a week.

It is a very frictionless experience.

Moving through a Costco is pretty seamless.

There's minimal signage,

the aisles are super wide, and the carts glide on

the concrete floors.

There are free samples and even the occasional

massage demonstration.

You're free nay, encouraged to wander and take

your time.

I have so many memories of being a kid with my

sister like running around the store playing tag

or like hide and seek because it's so easy to

hide in there.

My parents would leave me on the couch there and

I'd go through all the books.

They'd come back to pick me up when it's time to

leave. The longer I can hold you in the store,

the more likely I'm going to get more money out of

your pocket.

I'm a huge fan of the Costco food court.

The food court.

Food court.

I only went to Costco with my parents just to go

the food court.

That front snack bar is both a snack bar, but it

is also a parking lot and it's a parking lot for

your two-legged pets called often children and

husbands. This is my favorite type of samples.

What is it? Like the big

ones? The big ones, right? There's

a direct correlation between people who sample

and the amount of money you spend.

Aside from their famous $1.50

hotdog combo, Costco is well-known for its

in-house brand Kirkland Signature.

Kirkland paper goods, bottled water, and olive oil

are some of their most beloved products.

But Costco isn't all bulk toilet paper and coffee

beans. It also carries luxury items like this

engagement ring that cost nearly $28,000.

At first it seems asinine.

Why on earth would Costco be selling diamonds?

If you dig a little

deeper, it actually makes sense.

Costco's also built its franchise with an

older American affluent consumer.

It is the baby boomer generation that has the

money in their pockets and the incentive to save.

That baby boomer generation controls the

overwhelming majority of wealth in North America.

And you know what?

They're going to be around for a while longer.

Costco isn't just a store it's an ecosystem.

My mom's a master of Costco.

She even bought curtains there.

And she gets gas there.

She's embedded in the whole Costco ecosystem.

The most loyal consumers have been dedicating

more and more share of wallet towards Costco so

they might have started with household goods, and

then they went into grocery.

Then they started buying appliances, before they

know they were getting all of their furniture

from Costco.

And now you see a lot of people also

participating in their car and hotel programs,

for instance.

If I think about why people keep coming back to

Costco, there are three things that are part of

who they are as a brand that is very well known

which is value, quality, and consistency.

At Costco, you save money.

Members love Costco for their cheap, high-quality

products like peanut butter.

For New Yorkers it's clearly a better deal to

shop at Costco.

And let's not forget about the wine.

My favorite part of the Costco experience is

probably their wine section which I know sounds a

little weird.

Costco, it does obviously have some really great,

beautiful, expensive wines.

But it also gives you a lot of value-friendly

wines which are really, really nice.

Costco is the largest seller of fine wine and

expensive spirits in North America.

They make their money getting you to buy 200

garbage bags all at the same time.

They make money getting you to buy 10 pounds of

coffee rather than two.

But stocking all those garbage bags isn't free.

So how is Costco making a profit selling wholesale

goods? Costco runs about 4,000 items on average

per warehouse, which allows them to be extremely

efficient. Employees don't waste time restocking

shelves because of the store's design.

The other upside of having such a curated

assortment of fast-selling items shows up in

their balance sheet.

They're able typically to sell their inventory

before they actually have to pay it which keeps

the needs for working capital pretty low.

They have direct relationships with all of their

suppliers and then have a logistics setup where

they — the goods are delivered directly to their

warehouse. So that keeps the SG&A at a very

minimal level.

Costco plays by the Golden Rule.

You treat your suppliers and employees well, they

treat the customer well, and you make tons of

money. That's the Costco secret.

So how does this model hold up in the age of

Amazon.

The surgence of Amazon has not hurt Costco's

business and there are many consumer tests or

retail tests out there that compare if you're

buying bulk at Amazon versus buying in bulk at

Costco, where do you get the best deal?

70% to 80% of the time you're still getting the

best deal at Costco.

Almost all major big box merchants have some form

of online presence.

Having some form of physical place for us to be

able to do our drive by and pick something up is

going to be part of our consuming future for at

least the next 50 years.

It seems Costco nailed the formula when it opened

30 years ago, but it isn't perfect.

Costco has been traditionally a leader in looking

at how to improve the sustainability of their

supply chains.

They actually have done a great job at leading

the way toward sustainable seafood and I know

we're working currently on sustainable beef,

among other things.

One of the things that they could be doing to

improve their performance is respond to one of

the most pressing issues at the moment which is

how to reduce our plastic use and plastic waste

globally. So

anything they could do to to improve their

packaging, improve their their alternative

offerings to help customers eliminate the use of

single use plastics would be great.

Despite the criticism, Costco members remain loyal

for one simple reason: everyone loves a good

deal.

Are you a Costco shopper?

Do you think it's worth it?

Let us know in the comments below.