There’s a reason Costco had almost 137 million members as of 2024. When you think of Costco, a few key things come to mind:
Unbelievably low pricesUnique, exclusive inventoryHigh-quality productsOutstanding customer service
Of course, all of these benefits come at a cost.
Costco’s annual membership fees are notably higher than competing warehouse club chains Sam’s Club and BJ’s Wholesale. An annual Gold Star membership at Costco costs $65 a year, while an Executive membership costs $130.
By contrast:
A standard Sam’s Club membership costs $50 per year, while a Plus membership costs $110.A basic BJ’s Club membership costs $60 per year, while a Club+ membership costs $120.
Still, Costco continues to grow its membership base because its customers clearly see the value in shopping there.
During the company’s Q2 2025 earnings call, Costco CEO Ron Vachris talked up the importance of offering outstanding value, stating, “In uncertain times, our members have historically placed even greater importance on the value of high-quality items at great prices.”
In the course of that same call, CFO Gary Millerchip pledged that Costco would continue to prioritize value, stating, “We continue to look for ways to increase the value for our members, both with national brand items and our private label offerings.”
Costco-like membership-based grocery chain makes big move.
Image source: Shutterstock
Costco faces stiff competition from surprising new sources
Costco may be a leader in the warehouse club shopping arena. But that doesn’t mean other retailers aren’t slowly trying to invade its turf and steal members away.
Near Los Angeles, Resco Food Service is a massive grocery warehouse that recently launched a $20 annual membership deal. Known as an “Asian Costco,” the store stocks a variety of kitchen staples, from noodles to meats to sauces.
Now, another specialty grocery store is giving Costco a run for its money. And it’s hitting Costco in one of its most challenging markets.
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Erewhon, a luxury grocery chain with two membership tiers based in the Los Angeles area, is opening a New York City location, marking its first foray outside of California. However, this won’t be a typical Erewhon location.
The new store is opening a drinks-only location in a private members-only club called Kith Ivy, located in Manhattan’s West Village.
Members will be able to order beverages in person, while non-members will get access to the chain’s famous smoothies and juices through delivery apps like Postmates and Uber.
Is Erewhon a threat to Costco?
New York City is a tough market for Costco. Its high population density means NYC residents tend to pack tightly into small spaces, making a warehouse club membership a lot less valuable.
After all, what’s the point of someone with 420 square feet of living space total joining a store that’s known for its bulk products?
Costco also, by nature, tends to cater to customers who drive.
In New York City, a monthly parking space can cost almost as much as an actual apartment. Automobiles are a true luxury for NYC residents and, in many cases, a burden. But without a car, shopping at Costco is not very doable.
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Of course, Costco would probably like nothing more than to grow its NYC membership base given the fact that many Manhattan residents are higher earners with plenty of money to spend. But Costco also doesn’t have to worry about losing members to Erewhon’s new store concept, as it will cater to a completely different type of consumer.
Kith Ivy, which will house Erewhon, has an astounding $36,000 initiation fee and charges $7,000 in annual dues. That makes Costco’s $130 Executive membership seem like pocket change.
Furthermore, Costco shoppers tend to be budget-conscious consumers looking to stretch their paychecks. Erewhon is known for its $19 smoothies.
And chances are, Costco customers who are drawn to the iconic $1.50 hot dog and soda meal aren’t chasing opportunities to spend almost $20 on a cup of juice.
It’s also worth noting that Erewhon’s membership model is very different from Costco’s. Customers actually don’t need a membership to shop at any of the chain’s California locations.
Erewhon does sell a $100 yearly cafe membership that comes with perks for regulars, as well as a $200 yearly membership that provides cafe benefits plus discounts on different store items. But all told, Costco customers and Erewhon customers are on a completely different spectrum.
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Costco may not love the idea of another membership-based chain entering the fold on the East Coast, especially since it already faces strong competition from BJ’s Wholesale in that market. But chances are, news of Erewhon’s NYC plans won’t exactly leave Costco’s executive team shaking in their boots.
Maurie Backman owns shares of Costco.
