As a general rule, it’s a good idea for retailers to offer outstanding customer service. But Costco takes that concept a step further than most.
Costco is known not only for its extremely competitive prices, but also for one of the most flexible return policies in all of retail. Buy something you don’t like or whose quality isn’t up to par, and with very few exceptions, you can bring it back for a full refund at any time.
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Costco does other things to offer great value to members. It keeps a close eye on its inventory, while aiming to introduce new products from which customers can benefit.
Related: Costco plans new checkout option members should love
And you can bet that Costco keeps tabs on prices, too.
The warehouse club giant prides itself on offering unbeatable deals. Those extend to everything from groceries to household essentials to electronics.
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Costco pledges to shield its members from tariffs
Even though the tariff situation is still evolving, it has retailers spooked across the board.
Many retailers rely on foreign trade partners to source goods. And they know that if tariffs drive the cost of goods upward, they’re going to have to pass at least some of that increase onto consumers.
Related: Costco quietly drops popular product, saddens fans
Unfortunately, consumers can’t afford to be paying more at the register at a time when inflation is still a problem. So it’s a tough situation overall.
Recently, Walmart CEO Doug McMillon acknowledged that the company might have to raise prices in response to tariffs. Even though he noted that Walmart would do its best to avoid tariff-related increases, he owned up to the fact that the company probably would not be able to absorb all of the extra costs on its own.
If a giant like Walmart is sounding tariff warnings, you can bet that smaller retailers will be looking at raising prices, too. They may simply have no choice.
Costco makes a big move to protect members from tariffs
While many retailers are sounding alarms on tariffs, Costco is doing the opposite.
During the company’s most recent earnings call, the Costco leadership team reassured investors that it had the tariff situation under control.
“We’re remaining agile as a situation with tariffs evolves,” CEO Ron Vachris said. “As an example of this, during the third quarter, we rerouted many goods sourced from countries with large tariff exposure to our non-U.S. markets.”
Related: Costco brings back food court favorite, but members aren’t happy
In addition to moving goods strategically, Costco also intentionally held prices steady on key grocery items, even if that meant eating into profits.
During that same last earnings call, CFO Gary Millerchip called out two such items – pineapples and bananas.
“We felt it was important to really eliminate the impact there for the member,” Millerchip explained. “We essentially held the price on those to make sure that we’re protecting the member.”
In addition to keeping prices steady on key produce items, Costco also lowered prices on essential items like butter, eggs, and olive oil, Millerchip said.
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To be fair, Costco isn’t just holding and lowering prices out of the goodness of its heart. The company relies on membership fees for a huge chunk of its revenue. So Costco is invested in making members happy by keeping prices as stable as possible.
But regardless of the company’s motives for keeping prices low, Costco members still benefit. And at a time when so many retailers may be looking at price increases, Costco’s commitment to shielding members from tariffs can’t be overlooked.
Maurie Backman owns shares of Costco.
Related: Walmart makes surprise cuts as it looks at tariff price hikes
