Why does Costco have such a limited selection of the brands they carry? For example, they have stewed tomatoes, but only Italian style, not Mexican style or Cajun style. As wholesalers, why not carry the full line? Or do they get their stock from supply overruns–if that’s the case, then what makes them better than Grocery Outlet (a.k.a. the Canned Foods Warehouse.)?
Costco selection…
[Jay Sherman]
It Stinks!
[/Jay Sherman]
I tend to agree, but looking at how much space you’d need to stock 4 different varieties of stewed tomatoes, they’d probably have to quadruple the size of their warehouses. Remember, where your grocer can stock variety because he only has 10 or 20 cans of each brand on the shelf, Costco et. al. would need to have 10 or 20 pallets of each brand. You’d need a whole aisle just for stewed tomatoes!
I was privy to attend a few of the Costco buyer’s showcases, a large meeting where all of the buyers for all of the individual Costco stores go to select the specific items that would be carried in their store for the next season(or year, I can’t remember).
As for the Italian-style stewed tomatoes, Costco collects data from manufactures as to which products are in the greatest demand. A large majority of Costco shoppers work in the restaurant industry and are the major purchasers of items such as stewed tomatoes.
Costco is very responsive to the needs of the customer, though. If enough people make noise about the lack of an item that is the latest rage, Costco will do everything in it’s power to get it at the best price.
Ok, I worked for them but only as a sub-contractor. 
Ummmm… why is this a brain teaser? Isn’t it pretty much the explicit business model of the “warehouse” type retailers like Costco and SAM’s Club to carry a rather limited product selection and offer it in a no frills environment at a discounted cost.
http://www.channelstrategies.com/encyclopedia.html
“Warehouse/Wholesale Clubs
These are generally the most aggressive price-setters in the industry, relying heavily on membership fees to make a profit. Generally found in industrial warehouse locations with open shelving, concrete floors and minimum sales assistance. Examples include Sam’s Warehouse and Costco/Price Club.”