The Surprising Reason Costco Might Lower Prices

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Costco may soon offer even lower prices if it expands its revenue from retail media and advertising. Find out what this means for you. [[{“value”:”

If you’re a Costco member, you know that the warehouse club already offers decent prices on a lot of household products and grocery items. But some changes may be coming that could give you the chance to get even better deals and keep even more money in your bank account. Here’s why.

Costco could soon be tapping into a new revenue source

Costco may soon be able to offer even better prices to its members because the warehouse club will start earning additional revenue in a new way. The now-former CFO Richard Galanti discussed this new potential source of cash in the final earnings call before he stepped down.

Galanti indicated that Costco has been missing out on retail media and advertising dollars, which competitors like Walmart, Amazon, and Target are already making big bucks on. And he suggested that this will be a “point of focus” going forward because “we know there’s money out there.”

Galanti said Costco is bringing in some experts to help it expand into retail media and advertising, which basically means consumers could soon be seeing more ads for other manufacturer products in Costco stores and on Costco’s online site. While Costco is already doing some of this type of ad advertising, Galanti said “there’s a lot more that can be done there.”

More ads could mean lower prices — but consumers will need to be careful

The good news is, as Costco expands this revenue stream and collects more money from marketers, this could lead to more savings opportunities for consumers in the form of lower prices. Galanti made that clear in the same earnings call.

“Rest assured, whatever it is, we’re going to use it to — just like when we always said, if we can save $1 on buying something, we’re going to give $0.80 or $0.90 to the customer. I think that mantra will continue on this side as well.”

Of course, the bad news is that retailers are willing to pay for ads in Costco (and on sites like Amazon and Walmart) because those ads work. And it doesn’t do you a whole lot of good to pay less for items if you end up being swayed by flashy in-store or online ads and buying stuff you don’t really need.

The best way to beat the system and avoid this is to have a plan so you don’t fall victim to effective marketing. And there are a few ways to do that, depending just how tempted you tend to be. You could:

Shop with a list. Make a plan before any Costco trip and write down exactly what you want to buy. If something isn’t on your list, don’t purchase it. You can always put it on your list for the next time if you still really want the item in a few days or a few weeks when you’re heading back to the club.Bring only enough cash to cover what you plan to buy. If you really can’t stop yourself from being influenced by all of Costco’s ad trappings, then limit the damage you can do by only bringing as much cash to the store as you can afford to spend on each trip.

If you can avoid the impulse buys these retail ads are designed to inspire, you can benefit from the lower prices they bring to the store without seeing that savings eaten up by the extra items retailers are hoping you’ll charge on your credit cards.

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If you’re shopping with a debit card, you could be missing out on hundreds or even thousands of dollars each year. These versatile credit cards offer huge rewards everywhere, including Costco, and are rated the best cards of 2024 by our experts because they offer hefty sign-up bonuses and outstanding cash rewards. Plus, you’ll save on credit card interest because all of these recommendations include a competitive 0% interest period.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Gala, Target, and Walmart. The Motley Fool has a disclosure policy.

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