Triggers such as light bulbs and detergent can be

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Triggers, such as light bulbs and detergent, can be found throughout the store, sending shoppers on a treasure hunt, Laegreid says. While searching for toilet paper, consumers will see more of the store’s offerings, in turn creating more chances for impulse purchasing. Another unique offering at Costco is the rotation of goods. Many of the products are only offered for a limited time, creating a sense of urgency in making the purchase. Costco also excels at making consumers feel less anxiety on their shopping trip by offering only a few options. Instead of seven kinds of ketchup, Costco simply offers one. Less stress and anxiety parlays into value for customers, Laegreid says.
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Moving beyond take-home items, Costco’s food court continues to offer a hot dog for $1.50. Laegreid notes the low price and simple choice again shows the company’s effort to provide value to the customer. While the company has had its fair share of controversy (a recent gender-discrimination lawsuit), Costco is still getting accolades. This year, Costco was listed at 22 in the Fortune 500 and has become the fourth largest retailer in the country. District of Columbia law prevents gasoline stations from also selling alcoholic beverages. But when Costco decided it was interested in setting up an operation in DC earlier this year, city officials were eager to have them. So they agreed to a loophole. Costco could get a license to sell liquor and beer and wine, and rather than operating a gas station on the property Costco would divide the lot, with a small portion of it owned by a separate firm that happens to be a wholly owned subsidiary of Coscto. Thus both the gasoline and the booze can flow. Naturally, DC's other gasoline retailers are upset and now a furious lobbying battle is under way largely between Coscto and a Virginia businessman named Eyob Mamo who's the biggest player in the local industry. In terms of the policy fundamentals, I think the issue here that local officials need to grapple with is whether they want the retail price of gasoline to be lower or not. The alleged rationale for the "no booze at the gas station" rule is to prevent drunk driving, which makes very little sense given the practicalities of urban geography. The real impact is to make both gasoline and alcohol scarcer and more expensive than it would otherwise be. By forcing convenience store operators to choose between selling gas and selling beer, you get less competition in both industries. Reducing alcohol consumption is arguably good public health policy and reducing gasoline consumption is definitely good environmental policy, so the actual pre-Costco outcome
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wasn't crazy. But it is a somewhat absurdly inefficient way of achieving either of those goals.
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  • Spring '18
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