Most importantly, $60 cash upfront for a membership fee is nothing compared to all the cash you need to buy bulk items upfront. Is selling bulk items a way to keep "riff-raff" out?
Yes, bulk size prices can act as a secondary filter but an interesting mechanism is the membership cards are checked at the door and physically keep people out whereas bulk prices (even if low-income people don't buy them) don't accomplish the exact same effect. Membership gatekeeping at the entrance keeps the undesired shoppers away from the loss leaders of cheap $2 hotdogs & pizza, and taking advantage of the various free samples of food demonstrated at the aisles without buying anything. The door-based gatekeeping (as opposed to bulk prices gatekeeping) also minimizes customer shoplifting, etc.
There are also multiple levels of what "bulk" supply is. Is it restaurant-sized bulk (e.g. a gargantuan 4-gallon tub of mayonnaise) -- or a more modest family-sized type of bulk (e.g. 35-cans of Costco brand Kirkland soda for $7.99). Walmart sells 20-can pack of Coke for $16.00.
There's a lot of stuff that Costco sells that poor families could buy. Their bread is very cheap and one can buy 1 loaf for $5.00 instead of buying in bulk. Another person mentioned Costco gasoline is often the cheapest in town and poor people could save money refilling their car there. Their Kirkland clothes are really inexpensive. I just bought a 6-pack of Kirkland tshirts for $12.97. Walmart sells 6-pack FruitLoom for $16.00. (I think you'll agree 6 count of tshirts is not a bulk supply.) However, to save $3.00 on tshirts in that one transaction and similar subsequent ones, one has to plan ahead and spend $60 upfront. If you look at businesses for poor people like cash checking services, payday loans, and "Buy Here Pay Here" used-car lots, a lot of low-income people really can't scrape together $60 and pay it now for the purpose of saving more than $60 in the future. Their budgeting is so day-to-day (literally "paycheck-to-paycheck") that they have to shop at Walmart which is often more expensive than Costco.
EDIT add for clarity: when you say ", $60 cash upfront for a membership fee is nothing compared to all the cash you need to buy bulk items upfront", you're using a middle-class income lens. E.g. I'm also middle class and I spend $7000/year at Costco which dwarfs the $60 membership fee. Yes, poor people can't spend that same way. Instead, I'm saying that poor people can spend much less (say ~$500/year) and still get more than $60 savings back without tying up lots of cash in bulk purchases like you and I would do.
1. Poor people can group up to split both the membership fee and bulk items. Especially things like soap or razors with big discounts.
2. Costco also makes healthier stuff available at low cost that you might not match per ounce or whatever elsewhere. The Grow Right Orange Juice (2-pack), mix of rice/amaranyh/eyc (5-pack), and Go Organic Detergent are examples in our household. This will appeal to working-class and up mostly but some poor people still get some healthy stuff. Esp for kids or folks that are sick. Aldi is first choice, though, since remodel added tons of healthier stuff.
[0] https://old.reddit.com/r/Costco/comments/9bvjea/can_i_get_a_...
I've known people to go there as an after practice group activity to talk and eat incredibly cheap food. I wonder if they actually do lose money, their selection is so limited and the amount sold so high. I bet they make a small profit.
But this is untrue. Costco doesn't check membership at the door. That would block you from purchasing things that don't require membership.
They check membership at the cash register. Anyone and everyone is free to walk inside.
The 3 Costcos in my area all have staff checking for membership cards right at the door.
Yes, if one knows the "life hacks" such as the pharmacy hack, the liquor law hack, the "I'm picking up contact lenses at the eye center for my friend" hack, and lastly, the "I want to browse the store before I buy a membership" hack, the staff will let you through.
Apparently, all the above hacks are enough psychological friction and/or are not well-known that Costco has much less volume of problem shoppers than Walmart.
It's terrible evidence that the membership requirement provides any such value. Those checks are independent of the requirement -- as you acknowledge, the guards at the door are not even empowered to turn you away if you want to go in. (That said, I'll repeat that at my Costco, there is no check at the door.)
In a better world, Costco could admit that the "membership checks" are actually there to keep the tone of the store at a certain level, not to check membership. It'd be more convenient for everyone, and also more honest.
Every Costco I've been to does. at least 7+ locations across Oregon and Washington
Costco in Ventura County has two stores: the one in the rich area in Simi Valley, and the one in a (relatively speaking) poor area in Oxnard. The Simi store is half empty, while the Oxnard store has one of the highest sales in the entire chain.
I actually don't know if the $60 keeps anyone out. I think it's just pure profit, and an inducement for customers to return so they "get what they pay for." People are terrible at thinking about sunk costs, you know.
I don’t know what this means. I assume that’s a regional difference.
I live in an area where there are a lot of people who have to walk or rely on an incredibly unreliable and slow bus system. They’re not going to make a trip 5+ miles to the nearest Costco, especially since they’d have to walk half a mile to/from the bus stop and try to manage those bulk goods along the way.
Not to mention the fact that our bus system is mostly hub and spoke, so the bus trip would take 2-3 hours each way.
(Please don’t argue exceptions, I’m being reductionist on purpose)
The rest of your post describes a region where I would expect that statement to be particularly true. Does everyone live conveniently near their work, or are your low-income jobs forgiving of your incredibly unreliable and slow bus system? Either of those would stand out more as a regional difference.
It depends, but in many areas with extreme poverty and drug use there are businesses that break apart packages and sell single items, even when it is a violation of the law, such as single cigarettes
I did a cursory google on this and of the 5 random sources I looked at, they said the majority of shrinkage is customer shoplifting. Did you come across something reputable that concluded differently?
Left unchecked employee theft can scale. Think of a cashier skimming cash, or customer service person colluding with a friend to return junk. Both customer and employee theft require stoppage, but employees are tough because they are trusted by default.