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Nov 26, 2007 08:51 AM

NY Times Article: Costco is now for the "Elite"

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    1. The point of the article is to show that the elite shop at Costco, and tries to use people with high powered political ties as being the "elite" to validate it. Two people mentioned in the article as being ones that shop at Costco are tied to Rumsfeld and Cheney, another pair of people are both tied into Bill Clinton. All four use Costco as a resource for their dinner parties. I think it's going to be more commonplace especially for large functions. I mean look at Robert Irvine on Dinner Impossible, he seems to be a big fan too.

    2. When jfood sees articles like this he thinks

      "Good news. If the NYT is printing this it's a slow news day."

      Jfood found the article a big yawn. jfood could not care less where people buy their food and if their saving a couple of bucks thats great. Now if he saw one of his favorite chef's in costco at the meat counter then he would go over and strike up a conversation.

      And to think that Sally and Benny actually cook their own food for the shin-digs is fairly comical. "Oh Ben dear, does the meatloaf need more salt?" yeah right.

      They need to buy staples like anyone else. Does anyone think it was a coincidence that the NYT photographer just happened to be at Costco at the exact same time as the wife of the former EIC of the Washington Post? Another yeah, right. Jfood guesses the old Pentagon Papers battle is still being waged. What's next, the Washington Post running a story that the Ochs buy their detergent at Wal-Mart?

      1. Costco has always been for the elite. A rich man's Sam's Club. Their target market is households earning over $150k and small business owners. I work with a financial services firm that used to cross market in their stores because that's where all of the millionaires shop.

        This may be news to the NYT, but it's not to anyone else.

        7 Replies
        1. re: GastronautMN

          Ummm I don't agree! Our family shops at Costco and we definitely aren't even close to that income bracket...we find they have good quality products at decent prices!

          1. re: Chew on That

            I agree with Chew on That - a bargain is a bargain. But how much is a Costco membership these days?

              1. re: MMRuth

                It is $50, I just renewed. However, that $50 is easily recouped in 1 month given what I save on formula and diapers alone. Having shopped at Sam's and at Costco I mst say I don't see THAT much of a difference between the 2 and never really understood the idea that Costco was "for the wealthy".

            1. re: Chew on That

              That's just the target. The range of incomes is quite large. That said, the average household income for Costco members is over $250K.

              Just saw the new Costco cookbook, and the foreword is written by proud Costco member and hometown favorite, Mario Batali.

              1. re: Melanie Wong

                That sounds really high to me .... this article from last year says $77,000:


                1. re: Melanie Wong

                  If $250k is right then there would not be the checkout lines I experience LOL!

            2. BFD: the elite are tight with a buck and stunned by massive quantities like everyone else. BTW, if they were truly elites, someone else would be doing their the people in the articles.

              1. It's a type. It should read:

                Costco is for the Elle-Eat

                BTW - $250k average is so far off it's ridiculous, and $150 is not the right number either. Besides they absolutely no data to support any claim. And if you have been in the Costco's jfood goes to, no way.

                15 Replies
                1. re: jfood

                  Where are you located?

                  The median household income in the San Francisco Bay Area is ~ $70K, so it's not at all far-fetched here. Costco locations in the US are skewed toward the west coast and higher earning areas.

                  A few years ago, a senior exec at Costco told me that the Costco branch in the world with the highest sales per square foot, a standard indicator of retail performance, was in Scotland.

                  1. re: Melanie Wong

                    This $250k number is beyond ridiculous. I live in Loudoun County VA, right next to Fairfax County. These two counties have the highest average household incomes for counties in the US, around $95k-$100k. There is NO WAY the average Costco customer comes from a household more than twice as wealthy. It's completely absurd.

                    Even at the Costco we patronize, which is close to the Fairfax-Loudoun border, there's just no way. So for the entire chain, no way to the nth degree.

                    Where did this number come from, anyway?

                    1. re: Bob W

                      Maybe Costco came up with their statistic shortly after Oprah did her show where she strolled Costco's aisles with a shopping cart dumping in all sorts of things into it and crying, "Things are so reasonable here! I can't believe how much I'm saving!" Toss her income into the averaging pot and you get a tipped scale. '-)

                    2. re: Melanie Wong


                      Not understanding your point but let jfood try to clear up his thoughts and maybe you are both on the same page.

                      There is a difference between the average income of the area and the avg income of the store custo. if anyone believes that the average income of the person on line in Costco is 6-figures is smokin' the wacky weed.

                      To be clear jfood would guess that the avg income of the average custo in Costco is $50-60K, not 150k and surely not 250k. The 250k places that family in the top 5-10% of income in the US. The idea that the avg in costco is this demographic subset is absolutely incorrect.

                      jfood hopes that is a little more clear.

                      1. re: jfood

                        $250k is actually in the top 2.5%.... there is no way that is the Costco target market. Bristol Farms I might believe.... Whole Foods would be a stretch... Costco no way.... well maybe its not so far fetched... if Warren Buffet, Bill Gates & the Google geeks shopped there (and they probably do... or at least who ever does their shopping does).. then it could potentially skew the number that high in some stores. But if you calculate the Average by looking at the Median with a range of 5 to 10% on either side.... no way.

                        That said I do know some business owners whose annual income is well over $1MM that shop Costco (almost exclusively)... and live in an area where the average home is about $1MM and draws lots of people into Costco... so yeah for that store... I wouldn't be too surprised if the average income was that high.

                        1. re: Eat_Nopal

                          EN is right on the money. There are lots of small biz owners that shop at Costco and by and large they are the ones who have the highest incomes in the country. Not the super rich CEOs who are raping the shareholders of their companies, the top .01%, it's the next top 4.99% So these patrons drag up the average and believe it or not Costco is very effective at placing their stores in the suburbs where there is a very high average household income.

                          There are a lot of dual income families in this country that earn more than $125k. There also a lot of people on food stamps, but they don't tend to shop at Costco.

                          1. re: GastronautMN

                            Also income in this country, unfortunately, is becoming bimodal. The median or calculated mean doesn't represent very many people. Eliminate the bottom levels from your customer base, and the average can become quite high. And, don't forget the Millionaire Next Door. . . people can have much more money than you'd think.

                            That said, the $250K figure that I'm remembering could be net worth and not income. I'm certain of the dollar amount but no longer of what it defines.

                            1. re: Melanie Wong

                              Hi Melanie, I was about to suggest "maybe you are quoting the
                              median wealth statistic" as well ... which may heavily reflect the
                              real estate values of where the stores choose to locate.

                              But it's impossible for this to be an income average ... that's would be
                              a "sample mean" so far off from the population mean, it would be
                              much, much, much more obvious ... let's take a fun San Francisco
                              example: On Sunday night, I parked next to Boulevard. To get to my car
                              I walked past ~15 cars which was 100% comprised of mercedes,
                              porsches and BMWs [with a Jag at the end]. So yes, I would fully
                              believe the "Avg income of the people using the valet parking at
                              Boulevard on a Sunday is $250k". What kinds of cars do you see
                              in the Costco parking lot? Those arent the cars of people making
                              $250k per year. Especially the ones buying Costco gas :-).

                              Now I would be prepared to believe the income of the Costco
                              members "on the books" is higher than what you would guess by
                              seeing who is in a Costco at any given time ... because it's relatively
                              cheap for somebody making +$100k to just "auto renew" the $50/yr
                              without worrying a lot about the "economic optimality" [i.e. their
                              calculation is convenience driven, not savings driven]. So probably
                              a fairer average would do some kind of weighting based on how often
                              you actually shopped there [or how much you spent etc].

                              1. re: psb

                                The most popular vehicle for Millionaire's is the Ford F150. There are a lot of people who drive luxury cars who are "big hat, no cattle" and in debt up to their eyeballs.

                                In my experience at Costco you don't see a lot of beaters and you do see a lot of vehicular gratuitous displays of wealth.

                                1. re: GastronautMN

                                  A millionaire is a wealth not income measure.

                                  If you see a man in a Rolls Royce [who is not a chauffer] and a man in
                                  an F150, who are you going to assume is a millionaire? Yes, there are
                                  probably more millioniare+F150 than millionaire+RRs, but that is because
                                  there are a hell of a lot more F150s.

                                  I bet more millionaires have eaten at McDonalds than The French Laundry.
                                  In fact, McD may be the "most popular resto for millionaires".

                                  Most millionaire dont own GulfStream jets or Yachts ... but if I see somebody
                                  with a GS Jet or a yacht, I am going to assume they are a millionaire.

                                  So the numbers != signaling value in the Bayesian sense.

                                  If the avg household income is say $70k [Melanie's number from above],
                                  and say even 20% of the Costco members were at the avg, that means the
                                  avg for the rest 80% would have to be around $300k to have a overall avg
                                  of $250k. This is "a priori" absurd. So again, to hit that avg, you dont just
                                  need a lot of millionaires, you need to NOT have "regular people"
                                  dilluting the pool. Hard to do without a condo board/yacht club/country
                                  club type barrier to entry.

                                  It migt be interesting to see what is the income of the costco members
                                  who used their membership 0times in a year.

                                  1. re: psb

                                    I did a quick sensitivity analysis.... lets assume a particular Costco has 10,000 regular customers... of which 9,900 are average, and 100 are wealthy.

                                    > If the average income for the 9,900 was $70,000 per year... what would the average income of remaining 100 (roughly 1%) have to be to make the arithmethic mean hit $250,000?

                                    The answer is $18,070,000... certainly possible BUT it would completely mischaracterize the fact that just about everyone that walks through the door on any given day averages $70k not $250k.

                                    1. re: Eat_Nopal

                                      THis is the first time in my life that I ahve found a "math" discussion entertaining and interesting! :)

                                      1. re: alex8alot

                                        Interesting due to our lack of information. All we need are the mean, median, and standard deviation.

                                        1. re: alex8alot

                                          According to US census data cited by Wikipedia, mean family income in the US was $60,000 in 2004. Median annual household income in the US in 2006 was $48,000. Obviously, the distribution is skewed by the higher income earners: 6.4% of families in the US earn about a third of all income. The article cited by MMRuth above claimed that Costco members had a mean income of $77,000 in 2006, placing them well above the median and mean.

                                          1. re: Sam Fujisaka

                                            1. i believe some of us were making the point the $250k income
                                            figure could be ruled out without knowing anything detailed about

                                            2. re: costco being "well above the mean" ... i dont think that is surprising
                                            considering they have a "barrier to entry" of $50. i would guess the mean
                                            income of the subscribers to a magazine that cost $50 a year is above
                                            the population mean too. [when The Economist (~$110/yr) surveys its
                                            readers, i think the income bands go up to $250k]. or take CA personalized
                                            lic plates ... those appear to be $50/yr as well. i bet people with
                                            personalized plates is also above the mean.