Making Retail Fun Again...CostCo is Figuring it Out by Charging You NOT to Come

I used to play a bit of a game with retail clients, asking “If customers had a pay an admission fee to enter your store, what would you do differently?”

            Fun question, right? And, not so very farfetched if you can remember the lines around the block of tween girls waiting to enter Hollister on Fifth Avenue or imagine what a teen boy would ante up to be taken seriously in a Victoria’s Secret. Beyond adolescent sex appeal, of course, it takes a bit more imagination to make a powerful platform come to life at a level for which customers are willing to pay, with their money and their even more precious resource, time. That, of course, is the retail conundrum we’re facing.

            My friend Serra, to whom I always turn for wisdom, advice, keen thinking has shown me a vision of how retail really evolves. We’re not paying to go – we’re paying not to go. Witness her most recent experience with CostCo. It now offers a personal shopping experience that is rather nifty, if tagged with a bit of a hefty price. She placed her order on line, was told that for some percentage more she could have a worker shop, pack and bring it to her: I suppose I could figure out the fee, but let’s just say it was $17 on a $190 order.

            Now pause for a moment to consider: CostCo is known as the club store with great food, great brands and great prices. So, it was considered worth the schlepp. But now, it is monetizing the anti-schlepp. Adding a remarkable service that is at once personal (Tyler is picking out your Duracell batteries now) and technologically driven (we don’t have your brand in stock, so we’re issuing an immediate refund). Serra could, from the privacy of her newspaper-reading morning ritual, monitor Tyler’s shopping and movement towards her from the store. Tyler arrived with goods in hand, just when the algorithm said she would. Now, Serra, rank her service and decide whether and how much to tip.

            CostCo, famed bastion of low price, big quantity deals, is pioneering the margin accretive anti-shopping moment, turning it into a revenue stream that is probably richer than many of its SKUs. This is a notion that sits right on reality. Don’t make us go in there. We’ll pay not to. The retail zeitgeist is moving on: It’s not about low price. It’s about high (albeit highly automated) service and the gamification gee-whiz of technology. That, and a dollop of immediate gratification.

          Suddenly, membership has a fabby new privilege.