Costco differs from other retailers in that they charge members to enter the door to charge annual fees, and rely on these fees for the majority of their revenue. In fact, it is because of these fees that Costco can offer the low prices known to them.
Costco collects $65 or $130 a year from all member households, so there’s no need to significantly change the big profits of the inventory they sell. This allows Costco to afford to lose certain items.
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For example, the $1.50 Hot Dog and Soda Combo, famous for its food court, is a deal that Costco loses money every day. But it is also a transaction that encourages shoppers to come to the store and spend their money, not to mention renewing their memberships every year.
Related: Costco quietly pulls out popular products and confuses fans
In addition to its low stock prices, Costco is also known for having the lowest gasoline prices in town.
That’s another reason why many people are willing to pay for membership. By filling up your car each week and reaping those savings, you can easily compensate for the annual membership fee.
Furthermore, one lesser known fact about Costco Gas is that it retains the top tier designation. In other words, it is designed to lead to improved performance.
Filling your car at Costco will save you money not only is it low per gallon price, but it also has high fuel efficiency and longer engines.
Costco is planning to open a standalone fuel station
Filling gas is a perk to shop at Costco. You can drink groceries and cheap foods and refill your tank along the way before you get home.
However, not all Costco warehouses have gas stations. And it’s an overlooked opportunity for Costco, and it’s a shame for members who would otherwise appreciate the perks.
Related: Costco revives what a huge perk member misses
Currently, Costco is planning to open its first standalone gas station in Mission Viejo, California. Like regular gas stations adjacent to the warehouse club, this new fuel station will only be open to members.
Work on the project has already begun, and the gas station is scheduled to open next year.
Earlier this year, Costco extended gas station hours to provide appropriate services to its members. Some complained that fuel stations were limited, so Costco expanded them beyond the typical warehouse club time.
At most Costco locations, gas station hours are 6am to 10pm Monday through Friday, 6am to 8:30pm Saturday, and 6am to 7:30pm Sunday.
Costco’s standalone fuel station may not work as expected
During the company’s latest revenue call, Costco executives quickly noted that extending fuel station time increased gas-related sales. That wasn’t surprising.
Also, given its recent success, it’s no surprise to see Costco open a standalone fuel station.
Related: Costco CEO acknowledges that warehouse clubs may change time
But while both Costco’s management team and members may be excited by the idea of a standalone fuel station, it is a concept that can backfire very much.
If you’ve ever tried to fill up your car with a Costco shopping run, you probably had to wait on a decent sized line to fill your car with gas. Costco’s standalone fuel stations could attract crowds of members, leading to even longer waits.
There are also convenience factors to consider.
One thing is to go out of the way to go to Costco when you need groceries, wander the aisles of the warehouse club and hunt for new products and deals.
It’s another thing to get out of your way to fill your car cheaply with a standalone Costco fuel station. Just get stuck on a long line without promiseing a hot dog combo or a free sample to compensate for it.
Other Retail:
- Walmart CEO hears alarms about big issues for customers
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- Top investors take a firm stance on problematic retail brands
- Walmart and Costco are making major changes that will affect all customers
For this reason, Costco’s latest venture may not be as successful. And as a member, you may not love it.
Of course, only time can be seen.
But a big part of Costco’s value is the overall shopping experience, including gas, groceries and more. If you exclude everything other than gas from the equation, even if you save a few cents per gallon in the process, you could end up waiting a long time for a fun outing.
Maurie Backman owns a stake in Costco.
Related: Costco adds members of new food items they already love
