The Store That Sells Everything by Selling Almost Nothing

Membership fees brought in $2.684 billion in just 24 weeks, up 14% year-over-year. The cost of collecting those fees is essentially zero — there's no product to source, no warehouse to stock, no shipping to arrange. That money drops almost straight to the bottom line.

The renewal rate of 92.1% in the U.S. And Canada tells you something important: customers don't view this as an expense. They view it as a deal they'd be foolish to give up.

When retention is that high after a price increase, the fee has crossed into rare territory — it's price-inelastic. Most subscription businesses (streaming, SaaS, gym memberships) see measurable churn when they raise prices. Costco didn't. That means the company has a lever it can pull again. And the 14% fee-revenue growth rate suggests the market hasn't fully priced in how much recurring, near-100%-margin income this lever can produce over time.

For the 12 weeks ending February 15, 2026, Costco's gross margin (revenue minus the direct cost of goods, as a percentage) was 11.02%. A typical grocery chain runs margins of 25–30%. Costco deliberately prices products so low that competitors can't follow without losing money.

This works because of the SKU (a single product variant a store carries) concentration. Carrying roughly 4,000 products instead of 100,000 means each item sells in massive volume. That volume gives Costco enormous leverage with suppliers — if you're one of only 4,000 products on the shelf, you're moving serious units. That makes every supplier both valuable and replaceable at the same time.

The result is something that functions like a monopsony — a market with effectively one dominant buyer. For a mid-size consumer-brand manufacturer — think P&G, Unilever, or Kraft Heinz — losing a Costco slot isn't just lost revenue. It's lost scale that raises per-unit manufacturing costs across their entire operation. SG&A (selling, general, and administrative) expenses came in at just 9.19% of net sales, which means Costco's operational discipline lets it pass those supplier concessions directly to members rather than pocketing them.

That supplier dependency has a second chapter — and it involves a brand most people don't realize is one of the largest in the world.

Private-label products like Kirkland capture margin that would otherwise go to the brand manufacturer. The limited shelf space makes this even more powerful. With only about 4,000 SKUs, Kirkland doesn't face the usual wall of competitors that a store brand does at Walmart or Target. Fewer choices mean less decision fatigue for the shopper. Shoppers reach for Kirkland more often.

Gross margin ticked up 17 basis points (about 0.17 percentage points) in the most recent quarter. That may sound tiny, but on $134 billion in sales, small margin improvements translate into real money. Kirkland's growing trust among shoppers likely contributes to that expansion.

Think about this from P&G's or Kimberly-Clark's point of view. A shelf slot that existed five years ago is now taken by Kirkland. P&G can't buy it back — because Costco doesn't need their marketing dollars. As Costco grows and Kirkland gains trust, the leverage shifts further toward the retailer.

Costco drew viral attention by selling one-ounce gold bars through its warehouses and online, with rapid sellouts and waitlists. Gold bars won't move the revenue needle on a $134 billion business, but they generate earned media worth hundreds of millions in brand impressions — for free.

That matters because Costco's marketing spend is structurally near-zero. The company doesn't run national TV campaigns. It doesn't buy Super Bowl ads. Instead, bizarre viral products — gold bars, designer handbags, vacation packages — do the work. Selling gas at near-cost drives foot traffic to the warehouse, where members inevitably spend more.

These surprise products create a "treasure hunt" dynamic that functions as a customer acquisition engine with essentially no cost. That stickiness shows in the numbers: 82.1 million paid members and a 92.1% renewal rate. Compare that to a company like Walmart, which spends billions annually on advertising to drive the same foot traffic Costco gets organically.

The treasure hunt also extends to a place most people don't associate with Costco: the internet.

Digitally-enabled comparable sales grew 22% over the 24-week stretch ending February 2026. That's not a small e-commerce experiment. That's a meaningful growth engine running alongside the physical stores.

Costco's limited product selection — the same 4,000-SKU strategy that works in warehouses — may actually be an advantage online. Fewer choices reduce the overwhelming scroll that plagues most e-commerce sites. When you search "paper towels" on Costco's site, you get a handful of options instead of 200. That simplicity can improve conversion rates.

Total comparable sales grew 7% company-wide. The digital channel is growing at more than three times that rate. If Costco keeps growing digital sales by 20%-plus while its stores keep humming, it becomes a brutal competitor. It wins in stores. It wins online. And it funds both with a subscription fee.

But all of this good news comes with a price tag — literally.