Costco shares its last resort (and why that might happen)

Costco makes every effort to keep prices low for members.

That's essentially why people join the warehouse club. Members pay $65 for a basic Gold Star membership or $130 for an Executive membership, which comes with 2% cash back, up to $1,250 annually.

Executive members also get access to the chain's warehouses an hour earlier each day than regular members.

But, overall, Costco CEO Ron Vachris has made it clear that keeping prices low is its first priority.

“As we're dealing with the moving tariff scenes as things continue to change each day. We have been very fortunate with some of the key commodities coming down, and then our buyers are immediately the first ones down in those goods. So, we take every advantage of every opportunity that we can lower prices and we've seen our competitive landscape improve slightly at the latter part of the quarter, which is very good for us,” he shared during Costco's third-quarter earnings call.

Costco members rely on the chain more in tougher economic times.

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Costco puts price over everything

‘We're doing the right thing, but we're going to continue to invest in price. It's what we do. It's how we grow our business, and we're going to continue to try and mitigate as much of this impact on tariffs as we can for our members. So, it's — as we've always done, it's full force ahead on lowering prices where we can,” he added.

Keeping up with prices has become an obsession for the chain. Vachris shared a little bit of how that works during the call.

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“So, we're watching pricing daily and if not hourly, on every key commodity. And you have commodities like butter and eggs come down. There's quite a halo effect to many different items. So, our buyers are on top of that, talking to all the suppliers that would benefit from those reductions in costs and trying to really move that, those products into lower costs as soon as we can,” he added.

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The CEO suggested that his chain may give those cuts back to consumers sooner than most (or all) of its rivals.

“I can't speak for the others, but I can speak for us. It's about lowering the price as soon as we can and [taking] advantage of those opportunities,” he shared.

Costco does have a last resort

While Costco does everything it can, including taking a lower margin when selling certain items, the chain admits that tariffs have created uncertainty.

“At Costco, we remain committed to providing quality items at the lowest possible prices, and raising prices is always seen as a last resort,” Vachris shared.

He also explained how the company is fighting having to raise prices and why it's well-suited to weather tariffs well.

“The evolving landscape with tariffs is adding complexity and challenges for how we operate our business, but we believe our expertise in buying and limited SKU count model give us greater agility to navigate the environment and ultimately increase our member values compared to the market,” he shared.

He also explained that the company's strong financial position has given it flexibility in how it manages inventory.

“As far as non-foods, yeah, we did — we saw things starting to build on this tariff front, our buyers were very proactive, and they pulled a lot forward, a lot of our summer goods. Most of our patio program, our sporting goods program, got in early this year, got it in ahead of the tariff impacts,” Vachris said.

Had that not happened, prices likely would have been forced up by meaningful amounts.

“That allowed us to hold prices or come just slightly up on prices when we need it to be. So that has really helped. And then, some key categories that we have had good healthy inventory on such as furniture. Appliances are not so much impacted, which has been a big driver for us in non-foods as well,” he added.