...the over 75 million “mainlining” Costco members (and growing at a high single digit percentage rate annually), with an average annual income of $100,000, paying a $55 annual membership fee (or $110 for an executive level membership). Three million members a day enter Costco’s stores to get their fix.
Yes, you read those numbers right. In today’s over-stored and over-stuffed retail environment, the equivalent of almost one-fifth of the U.S. population is paying for the privilege to shop at a particular store. And this is not a one-off, let’s-see-what-it’s-like kind of visit. The renewal rate is a whopping 90 percent each year. I guess that captures the power of an addict’s behavior.
Not only is 80 percent of Costco’s gross margin and 70 percent of its operating income derived from its Costcoholics’ membership fees, Costco collects most of its profits 12 months in advance, not at the eleventh hour of the fiscal year like most other retailers.
