Most Costco members join the warehouse club to save money -- but plenty of them also have reasons that go well beyond the chain's relatively cheap prices.
For some, visiting Costco (COST) -) counts as entertainment. There's the treasure hunt aspect, where you never know what merchandise you might find.
You might visit the warehouse club for groceries and household items, but you're likely to return with a winter coat, a kayak, or an eight-foot-tall teddy bear.
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In some cases, it's not about what you buy. It's just fun to see what's on the chain's shelves, even if you manage to resist buying a five-pound barrel of candy or random sweatshirt.
The treasure hunt also may not be the best part of the Costco experience for many members, Some might pick the food court, with its cheap hot-dog-and-soda combos, and many love the free samples.
Currently, every Costco location has people -- third-party workers not employed by the chain -- handing out free samples. That happens every day of the week with weekends offering even more options.
The samples can be anything. You might get a taste of a new food product or piece of one you know really well. Sometimes there are tiny cups of different beverages and even hot items for members to try.
It's a very popular part of the Costco experience -- and it's going to change in a way you may not like.
Image source: Brooks Kraft LLC/Corbis via Getty Images
Costco making a big change to its free samples
During the covid pandemic, for obvious reasons, Costco suspended its samples program. It has brought it back, but it has been phasing in a major change to how its sampling offers will work.
"Earlier this year, Costco shoppers started reporting that the warehouse superstore has been phasing in self-serve kiosks in place of human sample reps to distribute the fan-favorite freebies," The Takeout reported.
Costco declined to say why it was making the change, but some of the reasons the company would do so are obvious.
First, it saves costs. Costco still faces higher costs on some items and Chief Financial Officer Richard Galanti has said on multiple earnings calls that the chain has not passed all those increases onto members. Not paying a third party for people to hand out samples likely lowers the cost of the program.
In addition, Costco's partners might be struggling to find workers willing to work for wages that are generally lower than what the chain pays its workers. With the labor market remaining tight, opting for automation might simply be the easier choice when it comes to keeping the sample program going.
Costco sees inflation fading
During its earnings calls, Costco provides more information on the things that affect its prices and margins than most companies do. Galanti had good news on that front during the chain's fiscal-third-quarter-earnings call.
"Inflation continues to abate somewhat. If you go back a year ago to the fourth quarter of '22 last summer, we had estimated that year-over-year inflation at the time was up 8%. And by Q1 and Q2, it was down to 6% and 7% and then 5% and 6%," he said.
The CFO sees inflation continuing to improve.
"In this quarter, we're estimating the year-over-year inflation in the 3% to 4% range. We continue to see improvements in many items, notably food items like nuts, eggs, and meat, as well as items that include, as part of their components, commodities like steel and resins on the nonfood side," he said.
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