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.
Tag along with a member
Shoppers who aren't members and aren't sure if they want to join can ask a friend who has a membership if they can tag along. Costco allows nonmembers to shop with their membership base. Sometimes the cashiers may ask you to check out on one bill, in which case the member and friend will have to divide the check later, Kirkwood said.
Members can bring up to two guests with them into a store, according to Costco's guidelines.
Flash a Costco cash card
Another method for nonmembers to get entry to Costco is to use a cash card, or Costco's version of a gift card. The trick here is that cash cards can only be bought or refilled by Costco members, so this requires shoppers to have a friend or family member with a membership.
Costco cash cards don't have an expiration date and can be used in the warehouses, at Costo's gas stations and at its online store. Some parents like to use the cash cards to give their college-age kids some money to spend on food or gas, while keeping a limit on their spending. The minimum for a cash card is $25, while the maximum is $1,000.
The pharmacy is open to everyone
Because stores aren't allowed to deny health services to anyone, nonmembers can fill their prescriptions at Costco pharmacies, which may count as one of the best benefits for nonmembers.
Costco has been found to have the lowest prices for many drugs, including popular generics such as Lipitor and and Singulair, according to Consumer Reports.
There's one catch: Like members, nonmembers must use either cash, debit or ATM cards, an American Express card or a Costco cash card to buy their medications. At the moment, Costco doesn't accept any other credit cards.
Free health care screenings
Costco offers free health care screenings for a number of issues, and they aren't only for members. Nonmembers as well can get free screenings for diabetes, osteoporosis and heart health at warehouses across the country. To find a schedule of free screenings, visit Costco's pharmacy site and look for the "health & wellness clinics" link.
Costco locations with a hearing aid center will also provide free hearing tests by appointment, while the pharmacy offers flu shots for $14.99 to both members and nonmembers.
Buy beer and wine without a membership
Thanks to laws that go back to the Prohibition era, which outlawed alcohol "clubs," shoppers without memberships can stop by Costco locations in a number of states to pick up some wine or beer.
Those states are: Arizona, California, Connecticut, Delaware, Hawaii, Indiana, Massachusetts, Michigan, Minnesota, New York, Texas and Vermont.
Tell the Costco worker who's monitoring the entrance that you're there to buy alcohol, and you should be allowed inside. At checkout, you'll also need a manager's approval to buy without a membership.
How to find managers’ specials
Costco's prices can tip shoppers off about whether an item is regularly priced or has been marked down, Kirkwood said.
A price ending in $0.99 indicates a regularly priced product, while prices ending in $0.88 or $0.00 may be manager specials. Kirkwood said these items can be discounted from 10 percent to as much as 60 percent off. Sometimes they're returned items or have damaged packaging.
Prices with an ending of $0.97 have been marked down, although the price difference may not be big, Kirkwood added.
How to know what products will be discontinued
One of the frustrations of shopping at Costco can be returning to pick up a favorite item and failing to find it on the floor. One way to figure out if an item is at risk of being discontinued is to look for an asterisk on the price label, Kirkwood said.
An asterisk "means they won't be restocking the item," Kirkwood said. "If it's something you want, you might want to stock up."
Finding deals on movie tickets to car rentals
Members often forget that Costco offers more than the goods in its warehouse. For instance, it sells travel services such as car rentals and vacation packages. The car blog Autoslash found that Costco's car rental services offer prices that "beat almost every rate out there."
Consumers who live near major movie chains such as Regal Entertainment Group can also save a few bucks by buying 10-packs of tickets through Costco, with each ticket costing about $9.99.
You don’t have to be a member to buy online
Nonmembers can always shop at Costco's website, but there is a catch: The company places a 5 percent surcharge on items bought by consumers without a membership.
The idea, of course, is to persuade those people to pay up for one. Prescription drugs, however, are exempt from the surcharge.