As of 2024, Costco had almost 137 million members. And there’s a big reason for that.
Costco does a great job of offering customers value at a time when life has gotten almost unbearably expensive.
While many retailers have been forced to raise their prices over the past few years, Costco has taken steps to keep its prices affordable. And the company consistently manages to do so without having to skimp on quality.
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In fact, it’s Costco’s member-first attitude that’s long contributed to the company’s success. That attitude is reflected in not just prices, but product selection and member benefits.
In an April 2025 interview with the Wall Street Journal, Costco CEO Ron Vachris said, “There’s nothing better than somebody else speaking positively about your company.”
It’s very clear that Costco’s reputation is important to the company’s management team, and that the company’s main priority is retaining members while attracting new ones.
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California grocery stores deals Costco a big blow
Costco currently operates 143 warehouse club stores throughout the state of California. There are more Costco locations in California than any other state, and many of those locations are known for their high volume of shoppers.
Notably, Costco’s Los Angeles-area stores tend to be some of its busiest. But now, there’s a new grocery megastore that could give Costco a run for its money.
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Located in a former office building, Resco Food Service is a massive grocery warehouse located in the City of Industry near downtown Los Angeles that opened in 2024. Often dubbed an “Asian Costco,” the store carries a variety of Asian grocery products, including:
- Rice
- Noodles
- Sauces
- Snacks
- Produce
- Meats
- Seafood
- Frozen foods
The no-frills store already has a huge following due to its wide selection of products and affordable prices.
It’s a store that attracts not only everyday shoppers, but restaurant owners who need to stock up on low-cost ingredients in bulk. And it has the potential to steal many of Costco’s customers away.
Costco faces big threat but shows resilience
Resco’s presence and popularity in Southern California should worry Costco for a few reasons.
First, Resco carries more than 5,000 items in its gigantic store. Costco, on the other hand, tends to limit its inventory to about 4,000 SKUs (stock keeping units) per store.
Granted, there’s a reason for that. Costco purposely tries to limit its inventory so it can not only negotiate great prices with its suppliers, but also keep a close eye on quality control.
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Still, everyday shoppers know full well that a Costco visit may not be enough to check every need off of their grocery lists. Given Resco’s broad selection, some may be inclined to take their business elsewhere.
Resco also offers an optional $20 annual membership deal that gives shoppers discounts and access to special offers.
Costco, by comparison, charges $65 a year for its Gold Star membership and $130 per year for its Executive membership. And at Costco, buying a membership isn’t optional — it’s a requirement if you want to get in the door. Resco’s membership isn’t mandatory — it’s just a bonus perk for frequent shoppers.
Still, if Costco plays its cards right, it may not lose too much business to Resco. For one thing, Resco’s product selection is largely focused on Asian goods, which may not appeal to everyone.
Costco’s inventory also goes well beyond groceries and household products, running the gamut from electronics to clothing to toys.
Also, at least as of now, Resco operates one location only. An expansion is something that should worry Costco, but at the moment, that doesn’t seem to be in the works.
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Still, Costco should be on alert for more competitors that aim to emulate the warehouse club experience without charging a mandatory membership fee. If more non-membership stores enter the retail space offering a vast selection of products with bulk discounts attached, it could cause Costco some major problems.
Maurie Backman owns shares of Costco.
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