Costco Wholesale Corp. may break some traditional retail rules, but the strategy has paid off.
In Canada, the membership-only warehouse club has the lion’s share of food sales and ranks No. 1 in trust among food and drug retailers.
In the Financial Post, Assistant Professor Allison Johnson explains why one of Costco’s unorthodox strategies – the membership fee – taps into consumers’ psychological impulses.
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“Once you have paid to belong to something, once there is a cost to enter, you feel more strongly attached to it,” she said. “There is a psychological sunk cost, and an exclusivity. They check your card at the cash. It makes it seem as though there is something going on that is special in there.”
