For what it’s worth, wholesale stores that I have shopped in won’t let you join because a condition of their local permits and planning permission is that they aren’t running a retail store.
Which is fair enough, because retail stores generate a lot more local traffic and parking problems.
The big retailers here put a lot of money and effort and politics into blocking competition, and that has traditionally included locking up retail sites to prevent competition.
I think this needs to be revised a bit…
I am a member of Costco, and any club that has me as a member isn’t that exclusive. There may have been a time when these clubs didn’t have open membership, but I think most of them will now take almost anyone.
Yes, all I had to do to join CostCo was to sign up.
The first club store was E.J. Korvette. It was a New York based chain that started right after WWII. At that time, stores weren’t allowed to discount off the suggested retail price. Korvette got around this by being a club store. Only club members could shop there and get discounted prices on home appliances. To join, you needed to obtain membership card where were conveniently passed out by the front door.
The original purpose of club stores was to firewall those discounts from “public” access and get around manufacturer limitations. Their main reason for existing now is that you couldn’t create better consumer control and research facilities if you started with a blank sheet and godlike powers.
Why, I’m positively INFLAMED with indignation. I am not a guinea pig!
Although I admit I like the exercise wheel and feed dispenser levers at Sam’s Club a lot more than at Costco. 
That “everyone knows it,” and further knows that they should be indignant (to put it mildly) and yet laughs it off is one of the most disturbing things I know. It makes a great punch line for a comic strip.
I wonder if there were fashionable colors of yellow for lapel stars in late-1930s Germany. Exclusive shades? Designer versions? Fashion shows? Cartoons about silly Solomon wearing his star on the wrong side?
Costco has treadmills. And airplanes.
And the pellets are excellent.
Seriously, a few weeks ago, Costco had kayaks on the floor and above ground pools big enough to float 'em in.
When I tried to join CostCo, and discovered they would have me as a member, I suddenly didn’t want to join any more. 
I’ve sold various products to Costco (and Price Club and Sam’s Club) in Canada for many years. Everything Cecil says is correct, but he really misses they key point completely on his answer here:
One of the major reasons they had “memberships” originally is that being only open to “members” allowed them to them say they were “not open to the public”. That in turn allowed them to open stores in industrial areas outside of metropolitan centres. Typically these areas do not allow “commercial retail” (open to the public) businesses.The taxes in industrial areas are significantly less than land zoned commercial retail.
The lower taxes gave them a massive competitive advantage versus traditional retailers. Additionally, the membership fee also gives them a massive financial war chest to use for whatever they want (store expansion, pricing etc.).
A few years ago this exact topic of whether they were really a open to the public or only members was the subject of a major lawsuit in Canada by Loblaw Companies (They are Canada’s largest grocery retailer & were getting their asses kicked by Costco). They sued Costco saying Costco was a “members” club in name only and, as noted here, pretty much anybody could get in. They even sent undercover private detectives in who did not fit the official membership criteria and those people were allowed to shop with “day passes”. They wanted the judge to order them to pay higher commercial real estate taxes or force them to close their stores because they were not following correct zoning rules.
As I recall in the end the judge ruled that Loblaw was 100% correct, but refused to award them any damages or specify any changes to Costco business practices, saying Loblaw shouldn’t be using the court system to stop competitors, they should do it in their own stores. If Costco found a loophole, good on them!
Some side notes -
After the Loblaw lawsuit they stopped day passes for non-members (in Canada at least), in fact if you’re not a member you’re not even allowed in anymore unless you’re with a member.
Over the last few years they’ve maxed out the potential members targets around most metropolitan area stores, so to increase members they have dropped all membership criteria (in Canada). Anyone can join as long as you pay the annual fee.
In case you were wondering, in my experience all items in Costco are sold between 8% & 11% profit margin for Costco, rarely less. I’ve never ever heard of them making higher than 11% profit.
Interesting legal history. I wonder if that was similar to the history in the U.S. After all, Canada is technically an independent country with it’s own court system (Aw, it’s so cute!). However, much of what Canada does is duplicated in the U.S. We too had all sorts of sales restriction laws that could have made companies like Costco use the club method as a loophole. I already mentioned E.J. Korvette did this in the 1950s. I remember that Costco once had day passes, and those were eliminated when anyone could join.
It’s interesting that Costco has a more or less 10% profit margin on most of their goods. However, I don’t think this is much different from many other retailers. Costco’s big advantage is dictating what they want from their suppliers. Since Costco can guarantee a minimal amount of orders, they can go to a manufacturer and say I want it this way, and get a specially made model exclusive for Costco, or a special package only sold in Costco. Costco’s wish is the manufacturers’ command.
Costco single-handedly made Vizio the electronic manufacturing powerhouse it is today. William Wang, the founder and CEO of Vizio decided to go into manufacturing electronics in 2002, and placed an order with Costco to produce TVs specifically for them according to their specs. The first TVs were sent to Costco in 2003.
Walmart really has this advantage. If you remember a few years ago (okay, it’s been decades), all deodorants were sold in boxes. According to the book The Walmart Effect (A very good non-polemic discussion about Walmart), one day Walmart decided that putting deodorant in boxes was wasteful. This added a penny to the cost of deodorant, and that penny could be passed on as savings to Walmart’s customers. So, Walmart announced to the various companies that sold deodorant to Walmart that it no longer wanted the deodorant in boxes. Wham, suddenly suddenly all deodorant was shipped without boxes to all stores throughout the galaxy.
Sure you can. They’re called Amazon and Google and Facebook and …
Can you even give specifics on how club stores are better at this than other types of chain stores?
Clubstores have always tracked the sales of each associate for years. When Price Club opened up in 1975 used the club membership and UPC scans to track sales. In fact, Sol Price, one of the founders of Fedmart in the 1950s, but was fired when he started pushing computerizing the stores.
UPC changed the relationship stores had with their suppliers. Before, the stores were buying items from their suppliers and the suppliers told them what to sell. By tracking sales and who bought what, Price Club knew what sold, and the best way to position an item to sell. Price Club to start selling shelf space which is now how most grocery stores now make money (and you thought you were the customer at the local grocery store). These practices were picked up by almost all other grocery chains which is why most have discount savings cards.
On line behemoths like Google and Facebook have also gotten into the customer tracking game and can play it in a way that makes all other retailers jealous.
Google had recently changed their TOS for gmail. They now can parse the contents of the gmail not just to sell ads, but to add to your on line profile as you browse around the Internet. Google owns DoubleClick, one of the largest ad supplier networks. Google can now follow you around as you go from one site with a Google adwords, to another that uses DoubleClick, to another. Plus, it has a lot of your information from Gmail, and Google+.
Facebook uses the “like” buttons to track you from one webpage to another – even if you’re signed out of Facebook. It has even more complete information on you than Google since it’s more likely to have your name, address, and friend network. Of course, every time you “like” something, that goes into Facebook’s little profile of you.
UPC codes did do all that, but in actual fact they were developed by a group of owners of supermarkets. I don’t know of any evidence that they were used in club stores before they were used in supermarkets. It may be true that Price Club was an early adapter and that it used them more sophisticatedly than supermarkets, but I’d like some cites on that. I don’t know how far back selling shelf space goes or who was first, but it’s been the norm in supermarkets for many decades.
I’m sure club stores are very good at these techniques, but I’m calling people on any claim that they are unique or do anything that isn’t done by every other savvy retailer, brick-and-mortar or online.
Glad you agree with me. That’s exactly why I think Amateur Barbarian’s claim is specious.
It’s not just that the Price Club was there first; it’s that club stores give their members membership cards, by which every purchase can be associated with an individual customer, rather than merely tracking what stuff gets bought in aggregate.
Regular grocery stores have compensated by introducing discount cards for their customers, but that didn’t become common until the 80s, I’d wager.
Powers &8^]
Did you really just compare warehouse stores to the Holocaust?
Well he did say that Club Stores are “one of the most disturbing things I know”. That sounds pretty aweful.
I said facilities. Online shopping is literally another universe and has (a shrinking number of) limits on customer tracking.
Completely closed body of subjects instead of random, frequently anonymous shoppers. While tracking by both real identity and imposed identity (“reward cards” etc.) is high in open stores, club stores have the advantage of a named, fully identified shopper base - and one that will put up with more overt herding and manipulation than, say, Safeway or Target or Home Depot.
No. I was comparing the total control of two populations for ends that do not benefit those populations. Our population does indeed fuss over the exact shade of yellow involved, though.
And Drunky proves again that he can’t read. Try again.