Costco Has a Secret Weapon Customers Should Love

The warehouse club has built its business on low prices and has managed to (mostly) hold the line despite rising costs and inflation. Here's how. Costco (COST) - Get

Free Report has built its business around delivering value to members. That sounds simple, but when your entire business hinges upon customers renewing their memberships because

they believe they're getting a good deal, keeping prices low becomes pretty much the only thing that matters. The retailer has used its purchasing power as part of that

equation. It has a huge reach and only sells limited SKUs which allows it to buy in massive quantities. Doing that allows its vendors to save on packaging and basically squeeze

every penny of value out of whatever items Costco buys. That's an advantage Amazon (AMZN) - Get Free Report and Walmart (WMT) - Get Free Report have as well due to their

massive size, but pretty much every other retailer can't compete on that level. The warehouse club, however, has another edge that allows it to offset rising costs and higher

prices. Costco's CFO talked about this pricing advantage during the chain's first-quarter earnings call.Value, Not Price Is the Key for Costco While low prices are

important, Costco's goal is actually offering a good value compared to Amazon, Walmart, Target (TGT) - Get Free Report, and your local grocery chain. That means the warehouse

club does not have to make every item as cheap as possible. Instead, it can use products with a higher margin that are still priced at a good value compared to its rivals to allow

it to take a smaller margin on other items.