Costco's (COST) cult-like following was built on a combination of prices and selection that has earned it a reputation as an upscale warehouse membership club.
It's not free to shop: Membership requires either a $55 fee for business and Gold Star members or $110 for executive-level members. Yet there's a secret that some shoppers might not be aware of: even nonmembers can take advantage of some of the warehouse store's offerings, thanks to regulations about health care and alcohol.
To be sure, members are in the best position to take advantage of all that Costco has to offer, which ranges far beyond pushing a cart down an aisle in one of its 698 locations. Called "the cheapest, happiest company in the world," Costco has also gained fans for CEO Craig Jelinek's philosophy of treating workers well in terms of pay and benefits, believing that it will create a happier workplace.
That philosophy carries over into the way Costco treats customers, who rank the company as the No. 1 specialty retail store in America, according to a February report from the American Customer Satisfaction Index.
"They have 100 percent satisfaction guarantee," said Matthew Kirkwood, an expert at Internet Brands, which owns shopping sites such as Ben's Bargains. "If you pay $55 a year, you can get a full refund at any time if you aren't happy. The $110 executive membership allows you to accumulate 2 percent rewards, and you get this Costco rebate check. But if you don't accumulate the difference between regular and executive fees, they refund the difference."
That approach has helped Costco to keep growing despite competition from its low-cost competitor Walmart (WMT) and online giant Amazon (AMZN). And Costco's average customer has money to spend, given that members typically earn about $100,000 a year and own their own home.
"They really stand by their membership and customer satisfaction," Kirkwood noted.
Investors also like what they see in Costco, given that the shares have increased 2.7 percent during the past year through March 4, compared with a 20 percent slump for Walmart and a nearly 5 percent decline in the S&P 500 index.
Read on to learn the top 9 secrets of Costco members and nonmembers alike.