The vast warehouse landscape that is Costco knows how suck you in and how to maximize the amount of goods you purchase on each visit. It’s what makes Costco so successful — a tried and true design focused on simplicity.
A carefully orchestrated layout, simplified offers and the perfect amount of temptation combine to make Costco one of the most successful retailers in the United States.
The designer of many of Costco’s 648 stores, Stan Laegreid, a senior principal with MulvannyG2 Architecture, laid out just why Costco is so successful in an article with Fast Company.
UPDATE: A rep for MulvannyG2 sent Consumerist the following disclaimer about the author of the Fast Company story:
“Stan does not design Costco stores. We have a team of about 120 people who have served Costco for more than 25 years, and we value that partnership beyond compare. Stan is a senior principal and retail designer in our firm who, after coming to us from a competing firm several months ago, wanted to study and understand Costco’s business model—what is it that makes them so successful—and he wrote the article initially for our own staff out of admiration.
Laegreid likens Costco’s layout to a racetrack with a carefully choreographed dance that will lead customers past all of the warehouse’s more than 3,000 products.
The store employs low-profile shelves to allow consumers to see the expansive offerings across the store, making the three-acre warehouse seem less overwhelming. The outside of the store is rimmed with floor-to-ceiling shelves of goods, while the inside showcases home, seasonal, and lifestyle products. Fresh offerings can always be found at the far end.
Triggers, such as light bulbs and detergent, can be found throughout the store, sending shoppers on a treasure hunt, Laegreid says. While searching for toilet paper, consumers will see more of the store’s offerings, in turn creating more chances for impulse purchasing.
Another unique offering at Costco is the rotation of goods. Many of the products are only offered for a limited time, creating a sense of urgency in making the purchase.
Costco also excels at making consumers feel less anxiety on their shopping trip by offering only a few options. Instead of seven kinds of ketchup, Costco simply offers one. Less stress and anxiety parlays into value for customers, Laegreid says.
Moving beyond take-home items, Costco’s food court continues to offer a hot dog for $1.50. Laegreid notes the low price and simple choice again shows the company’s effort to provide value to the customer.
While the company has had its fair share of controversy (a recent gender-discrimination lawsuit), Costco is still getting accolades. This year, Costco was listed at 22 in the Fortune 500 and has become the fourth largest retailer in the country.