Costco has a very limited selection compared to other retailers its size.
That’s an intentional choice that allows the company to keep prices down. By selling, for example, one SKU of ketchup rather than various sizes and packaging options, Costco maximizes how many of that unit it sells, giving it better bargaining power with its vendors.
Essentially, when a retailer negotiates with a vendor, something I did for many years working at my family’s steel scaffolding business, the more you buy, the lower the price. If I ordered steel by the truckload, it was cheaper than a partial load order.
Costco uses that principle, and the fact that it only stocks about 4,000 unique products in its warehouse (about 40% of what a traditional grocery store carries) gives the chain leverage to negotiate lower prices. By keeping the product count low, the warehouse club makes every partner earn their shelf space, and sometimes, it means that a store staple, or a new favorite, loses its spot.
That can be traumatic to members who see an old (or new) favorite disappear. Costco members, however, can get a little insight into what products may soon go away if they know the chain’s secret code.
Costco tells members what items are being discontinued
Costco offers two types of merchandise. First, it has core staples that it always offers.
Your warehouse club will have milk, coffee, cereal, and other basics. The brands, sizes, and packaging may change, but you won’t go to Costco and find that it’s not stocking the basics.
In addition, Costco has its rotating merchandise. Some of those items, like clothing, seasonal sports gear, holiday products, and more, only appear for a short window.
If you missed the recent Esprit sweatshirt, which was a viral hit that sold out quickly, according to Today.com, it’s probably not coming back.
Some of these non-staple items, however, are regulars. Maybe Costco offers a K-Cup flavor you love, has a candy or chocolate you like, or stocks a frozen meal, beer brand, or something else you truly enjoy.
In some cases, those items get phased out. Maybe they don’t sell well enough, or perhaps the manufacturer and Costco can’t reach a deal to keep the item on sale.
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When that happens, Costco discontinues the item without telling members. There is, however, a way to know when your favorite items are being phased out, but you need to know what to look for.
“Costco’s limited inventory and constantly rotating selection are part of what gives the warehouse its treasure-hunt appeal. So when you stumble across a product you love, take a quick look at the shelf tag. If the large white price sign has a small asterisk in the upper-right corner, you’ve spotted what’s known as Costco’s ‘star of death,'” Food & Wine reported.
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Costco members need to know the code
The symbol can mean two different things.
“The Death Star is typically added to seasonal products that return annually and to unpopular products that will be permanently retired,” according to Delish.
Costco does not share whether the item is being permanently removed.
“That doesn’t mean that it’s always going to be discontinued forever,” said David Schwartz, co-author of “The Joy of Costco: A Treasure Hunt from A to Z,” in an interview with Delish. “That could mean that it’s gonna be given a rest for three months, and then come back.”
Costco did not return Good Housekeeping’s request for comment on the secret code.
Costco is careful with its inventory
Costco constantly adjusts its inventory partially to meet member needs and partly to keep costs down. Global situations like wars and the ongoing White House tariffs can have an impact on what the warehouse club stocks.
CFO Gary Millerchip commented on the company’s inventory during Costco’s third-quarter earnings call.
“The supply chain is generally stable, and our merchants feel good about our inventory position heading into the summer. We have relatively low inventory exposure to shipping issues stemming from the situation in the Middle East, but we continue to monitor the situation closely,” he said.
Costco plans out each item it stocks, according to RTM Nexus CEO Dominick Miserandino.
“It’s simply an economics of space. The average retailer could have 10,000 to 15,000 SKUs, but Costco could have 3,500 to 4,000,” he told TheStreet. That’s a significant difference (and a Walmart or Target could have two to three times that many products). So, yes, they’re going to be most efficient and only stock the shelves with what they think will sell.”
(Costco SKU counts vary by warehouse.)
CEO Ron Vachris shared some insight on how supply chain impacts and sourcing impacts pricing.
“One of your examples was you saw some inventory that we had during higher tariffs. Now we’re getting the lower-priced goods in. We may go down earlier in those to get into those lower-priced goods quicker. We’re down quick on eggs when that commodity started dropping,” he said during the Q3 call.
Related: More Costco members are paying double for one reason
