Costco Isn't Just a Retailer -- It's a Subscription Business in Disguise

Group 1 - Costco Wholesale is perceived primarily as a big-box retailer, but it operates more like a subscription business, which is crucial for investors [2][4] - Membership is central to Costco's business model, generating $5.3 billion in revenue in fiscal 2025, with minimal operational costs leading to high profitability [4][5] - The company had 81 million paid memberships in Q4 of fiscal 2025, reflecting a 6.3% year-over-year increase, and membership revenue grew by 14% year-over-year due to fee increases [5][6] Group 2 - Membership renewal rates are exceptionally high at 90% globally, contributing to a resilient customer base similar to streaming services [6][7] - The membership model supports Costco's low-cost strategy, allowing the company to maintain low prices that attract more shoppers, enhancing sales volume and supplier leverage [7][9] - Costco's self-reinforcing model encourages customer loyalty without relying on promotions or advertisements, leading to greater predictability in revenue [9]