- Many people associate Costco with bulk deals to save money.
- But the warehouse store chain also sells pricier items you might not expect to find there.
- As its chairman told Chief Executive magazine, “Affluent people love a good deal.”
Gold bars. Rolex watches. 10-karat diamonds. Porsches.
These luxury items aren’t what you’d typically associate with Costco, but Chairman Hamilton “Tony” James says pricier items like these are an integral part of Costco’s strategy just the same.
James, who has sat on Costco’s board since 1988, explained the company’s approach to appealing to wealthier members in an interview with Chief Executive magazine published Thursday.
“Most members are average-income earners nationally, but we also have affluent members with two times the average income. That gives us the ability to do remarkable things,” he said. “Since the beginning, we’ve always known we could move anything in volume if the quality was good and the price was great — Rolex watches, Dom Perignon, 10-karat diamonds. A Porsche dealer in Seattle put their cars on the floor of a Costco, and they sold out in a week.”
In other words, “Affluent people love a good deal,” he said.
Data from consumer analytics firm Numerator on the typical Costco customer say the membership warehouse chain was more popular with higher-income millennial and Gen X households than many of its peers in the year through June 2024.
Costco’s pricier offerings over the years have included products like a $400,000 diamond ring, a Bugatti electric scooter, a freestanding wine cellar, and a 6-person indoor sauna.
The company also sells gold bars and silver coins.
James is unsure, though, “if affluent people are buying them or just people suspicious of the economy.”
Analysts have estimated Costco sells roughly $200 million of gold and silver a month, and former CFO Richard Galanti has said its supply usually sells out within hours.
“We’re not interested in selling just anything at a low price,” James said. “If someone wants to buy a $500 TV for $250 at Costco, we want to sell them a $1,000 TV for $500 instead. We’re always trying to find better items to sell to members, giving them a great deal. We’re by no means a dollar store. At the same time, we’re always trying new things like gas stations, large products like appliances, pharmacies.”
And if in doubt, there’s always the famous $1.50 hot dog combo.
