Sneaky Little Ways Costco Gets Us to Spend More Money (We Fall for It Every Time)
Many first-time Costco visitors find themselves in awe of the sheer production these warehouses make out of grocery shopping. It’s surely a sight to behold with an expansive food court, trampolines hanging from the ceiling, and aisles after aisles of bulk buys you likely won’t fit in your car. Then, your eyes fall on the biggest toilet paper display known to man, and your mind is blown.
It’s hard not to abandon all control at a store that promises big savings, but that only makes you more susceptible to the endless ways Costco tricks you into spending money. Even seasoned members can fall victim to these sneaky tactics, as most of them are employed without your knowledge. Unless you know what to look for, you’ll continue to waste countless dollars during every trip. Here are 15 ways Costco tricks you into spending more money.
1. Free samples
Much has been said about the psychology behind Costco’s notorious free samples offered throughout the store. People love free food, but retailers especially love its money-making impact. Studies show providing free samples can boost sales by at least 30%, swaying people to buy things they never planned on purchasing.
“When we compare it to other in-store mediums … in-store product demonstration has the highest [sales] lift,” Giovanni DeMeo of the product-demonstration company Interactions, which handles Costco’s samples, tells The Atlantic. So enjoy the smoked sausage bite while you can. It won’t be long until you’re coerced into buying a pound of it.
Next: Fear of missing out
Costco is infamous for constantly rotating store items. This helps ensure customers have access to seasonal goods, but it’s also a driving factor in influencing buying power. The fear of missing out on rotating inventory drives a lot of irrational buying — and might cause you to pull the trigger on an unnecessary purchase with a “just in case” mentality.
Even the overall feeling that you’re about to score a good deal at one of the nation’s most cost-effective grocery outlets is enough to encourage a bit of impulse buying. The likely outcome: “Will this reasonably priced trampoline still be here when I return? Best to get it while I can.”
Next: Looks aren’t everything.
3. Carefully chosen warehouse decor
Walk into any Costco, and you’ll notice exposed beams, concrete floors, pallets used as storage, and plain metal shelving. This is a Costco trick aimed at influencing consumers. Minimalist advertising makes us believe Costco’s products are cheaper than anywhere else — especially because it doesn’t waste money on fancy lighting and other typical retail decor. This may be true, but avoid abandoning all common sense at Costco just because your surroundings make you think you’re getting a good deal.
Next: The ways it lures you in
4. Big-ticket items at the front
As soon as you enter Costco, look down. In fact, look anywhere but at the expensive items bombarding your field of vision. Do not be distracted by the big-screen televisions, smartphones, and other pretty, but irrelevant, toys by the entrance. Costco is attacking your muster yet again and silently urging another impulse buy.
But it’s not just Costco that’s perfected this ploy. Grocery stores do the same by putting the brightest and shiniest produce at the front of the store, luring customers in with lightly misted lettuce and perfectly yellow bananas at their weakest shopping moment: the start.
Next: Costco is willing to gamble.
5. The loss leader
Because the deals are noteworthy in certain areas of the store, it’s common practice for shoppers to believe everything is a good deal. But baiting you with one sale and intermingling a few products that aren’t good deals is one subtle way Costco urges you to spend more money.
Researchers have studied how retailers, drugstores, and grocers use a strategy known as a “loss leader” to get customers in the door. In other words, Costco will lure you in with cheap baby formula and batteries and then tempt you with things, such as books and DVDs, which are historically bad buys at the warehouse giant. It’s more than willing to take a loss on certain items if it ensures you’ll buy other things.
Next: A confusing layout on purpose
6. Tricky layouts
Costco makes customers enter on the right of the store, which is smart considering shoppers tend to turn right unconsciously upon entering. So it’s no surprise that it uses layouts to create a high-impact impression from the beginning. But as you proceed to make your way, it’s only natural to feel slightly disoriented. In what’s known as the “Gruen Transfer” — named after mall architect Victor Gruen — stores incorporate a crazy layout that disorients customers, slows them down, and makes them forget what they came to buy, thus increasing the odds of extraneous spending.
Costco has painstakingly crafted a layout designed for confusion. Then, of course, it hits you with the food court scents upon exit. How convenient. All that bulk shopping is bound to work up an appetite.
Next: Speaking of layouts that don’t make sense
7. Items that go together aren’t in the same place
Ever notice that some popular Costco items aren’t where you’d expect them to be? Beer is nowhere near the wine, and the pharmacy, a popular Costco perk, sits all the way in the back of the store. But other superfluous items are conveniently displayed together, such as reading glasses and magazines or batteries and electronics. It’s like an expensive, mildly exciting treasure hunt across the aisles to find what you need. And by the end of your excursion, Costco has tricked you into hitting almost every square inch of the store.
Next: You’re part of an exclusive club
8. The membership promotes exclusivity
The very fact that Costco promotes an annual membership is one of its sneakiest — and most effective — marketing ploys. People love feeling like they’re part of an exclusive group. And the Costco membership promotes exclusivity as consumers feel privy to perks others aren’t aware of, thus strengthening their support and loyalty to the brand.
Next: The price of a membership
9. The pressure that comes with a membership
Building on membership effectiveness, people want to justify the annual fee by getting the most bang for their membership buck. There’s an inherent hesitation that comes with paying to grocery shop while the same could be done elsewhere for free. And while many justify this need claiming the membership will pay for itself, there’s corresponding pressure to make your admission worthwhile.
Next: Take the pressure out of the equation.
10. Generous return policies
According to The New York Times, 91% of customers believe a store’s refund policy will influence their purchasing decision. Costco expertly removes self-doubt from the equation by offering one of the most flexible return policies in the industry. Not only is your membership fully refundable, but most items can be returned, no questions asked. This surely promotes impulse buys and reckless spending — nevermind the fact that most people never actually get around to returning items they say they will.
Next: A carefully chosen price tag
11. Strategic pricing
Costco emerges a hero offering consumers low prices, but it’s not all that saintly when considering low prices only encourage consumers to buy more than they normally would. The left-digit effect explains how 1 cent can seal the deal, and it is a key Costco trick used to persuade additional spending. For instance, research states that shoppers are more inclined to purchase something listed at $10.99 rather than $10, simply because the higher priced item looks cheaper than the lower priced item.
Most Costco prices incorporate odd numbers, such as 7 and 9, for this very reason. But if you see something listed in “.00” it’s your time to pounce. That item has been significantly marked down and can be your best shot at saving money, according to Little Things.
Next: A respectable act designed to influence spending
12. Reusable totes with Costco’s logo on it
Environmentally friendly totes are effective marketing strategies in more ways than one. Not only are they greener alternatives to plastic bags, but they offer additional square footage for brands to display their logos to potential customers. Costco seems to be joining other popular stores, such as Ikea, Whole Foods, and Aldi, in employing this sneaky marketing tactic.
These reusable totes are sought-after Costco finds for loyal shoppers. But what customers don’t know is they’ve fallen prey to a ploy that ensures they arrive with a large empty bag to fill with more items than they need.
Next: Acts of kindness aren’t all that kind.
13. It’s all about the experience
Employees are impeccable at selling the Costco experience to consumers, whether it be the unmatched food court, aisles filled with intriguing toy displays, or insightful product demonstrations any wandering customer just can’t miss.
These demonstrations and other extra services evoke a feeling of reciprocity. The concept “if we do something for you, you do something for us” is highly influential in increasing consumer spending, and it’s something Costco does quite well. Stores can easily manipulate these types of feelings with a small giveaway or simple acts of kindness. Put simply, it’s a shameless guilt tactic stores love to impose on harmless customers.
Next: Rest areas designed to get you to spend more money
14. Shop while you rest
Be wary of any store that offers you a place to put your feet up — say, the Costco food court or the furniture section. Waiting areas filled with benches and seats only encourage customers to spend more time in a store. It’s no mistake that those chairs are often facing merchandise. Stores view this spot as a last-ditch opportunity to unload merchandise they prefer to sell quickly. So, by all means, take a load off, but know you’re being baited in the process.
Next: Gift card trickery
15. Gift card decoys
Costco offers insanely valuable deals on gift cards. For the consumer, that’s a welcomed benefit. They’re practical, no-hassle gifts, perfect for all occasions. But these seemingly convenient gifts are also an ingenious money maker for Costco. Not only does this product bring new and old customers to the store, but it encourages customers to spend more.
When shoppers arrive with gift cards in hand, they’re likely to spend 20% more than the value of the card, according to Investopedia. What was a total win for Costco is only a slight win for the person with the gift card, who fell victim to yet another sneaky Costco marketing trick.
Follow Lauren on Twitter @la_hamer.