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The merger between Price Club and Costco in 1993 created a unique retail entity known formidably as Costco. This collaboration enabled the brand to significantly expand its presence while integrating and evolving effective strategies that would come to define modern warehouse retail shopping.
A Unique Business Model
Costco's success comes from its innovative pricing strategies, which prioritize value over profit margins. By implementing a membership model, Costco ensnares customer loyalty; the upfront fee enhances the buying experience, prompting members to spend more to justify their investment. Membership fees account for a sizable portion of their profits—about 4.8 billion dollars—despite only forming approximately 2% of total revenue.