Costco gained a cult following by breaking every rule of retail
I don&#x27;t remember where I read the following analysis (maybe from someone here on HN?) but it goes something like this...<p>Costco&#x27;s membership fee (minimum is $60) has several benefits that the media don&#x27;t like to talk about -- because it&#x27;s unpleasant to mention it. <i>The membership fee charged by Costco helps keep the riff-raff out.</i>  Although the cheapest Costco membership at $60&#x2F;year looks like a trivial amount to middle-income people, even that tiny cost is enough to be an unreachable Mt Everest for the poorest segments of society.  Therefore, the membership fee acts as a <i>socially acceptable way</i> to keep out the undesirables.<p>Often, you&#x27;ll see a thread on reddit showing photos of &quot;Walmart shoppers&quot; with tube tops and loose pants with butt cracks showing.  That&#x27;s not the type of clientele that shops at Costco.  Walmart also has a huge problem with shoplifting and employee theft (what the retail industry calls &quot;shrinkage&quot;) and therefore, there&#x27;s often a police car outside to arrest somebody.  Costco&#x27;s membership requirement is the hurdle that helps them avoid all that.<p>Costco makes money on the membership fees itself, but they also <i>save money</i> by not having to deal with shrinkage because their higher-income clientele has less problems.<p>The above advantages only adds to the other positives such as simpler logistics of ~4000 SKUs at Costco vs 40000 SKUs at Walmart.