The Ethical Dilemma of Costco
My personal musings about the retail behemoth
For years, I have had a confusing relationship with Costco. When I ran my farm box business, any giant company selling cheap food felt like a personal threat to my mission.
There is a famous story about when Theo and I were early dating. He picked me up from the airport with flowers, but when I noticed the back seat was full of Costco toilet paper, I had a mini-tantrum, which ruined the moment.
I know Costco has a cult status. People are obsessed with their prices and deals, as well as the Kirkland brand. Even their hot dogs have shot into fame. My good friend Katie and her family are so in love with Costco that they had a Costco-themed party (with uniforms) and a surprise birthday party on-premise.
I try not to rain on anyone’s parade, but I have always felt conflicted about Costco. After listening to a 2.5-hour episode of the podcast Acquired about the company's history, it felt like the right time to finally think through some of my objections.
What people love about Coscto are the low prices so for me, it’s nothing against Costco itself, it’s the idea that food should be so cheap and that we should buy something just for a good deal and buy the cheapest brand available. Shopping at Costco goes against most things I believe in, which is to support local, shop the farmer’s market, and try not to get too caught up in the obsessive buying culture of hyper-capitalism.
The too-cheap prices are best exemplified by their rotisserie chicken business, where they sell over 100 million chickens a year at $4.99, known as a loss leader, which means they are willing to lose money on a product to get people in the door and shopping. I could write an entire essay about issues with the Costco rotisserie chicken, but I’ll leave it with a reminder that if the price seems too good to be true, it probably is and a link to some disturbing info here.
Costco (previously named Fedmart) was founded as a place for small businesses to buy wholesale products for their stores, and the founders never thought consumers would want to pay a membership and buy in bulk right off the pallet, but it turns out they really did. Today, Costco is the 3rd largest retailer in the country, and 1/3 of US shoppers are members!
Many people would say that Costco’s low prices are great for accessibility, but I’ve now learned that the average Costco customer has an annual income of 125k while the average Walmart shopper’s median income is 80k. A Costco consumer’s median income is over 70% higher than the average US income of 71K.
What I do like about Costco is that they have a strong code of ethics, treat their suppliers with respect, pay their employees well, and apparently never raise the margin on products over 14%.
So, if you love Costco, I get it! I support you. It’s deep in our psyche to love a good deal. But my fear is that Costco is setting these low prices, making it difficult for shoppers to ever pay more. Like why would I pay $14 for a local loaf of sourdough made from regional grains when I can get a month’s worth of bread for the same price at Costco? You see where I’m going.
For now, Costco is not known for its produce. Because they sell in bulk, even price-conscious shoppers know they likely won’t be able to use 10 peppers, a crate of tomatoes, or a giant box of lettuce before it goes bad. So perhaps these millions of Costco shoppers still go to the farmer’s market and then get great deals on everything else they buy? A girl can dream.
I would love to know from anyone reading this - are you a Costco fan?
Stats and history from the podcast episode on Acquired, are beautifully sourced here
Gems of the Week ✨
This INSANE chocolate cake made with sweet potatoes - there is no butter in that frosting!!
Bloom Greens Powder - new to my morning routine
The interview with
on how she grew her Substack from Food Blogger ProThe 21 Days of Abundance with Deepak Chopra Meditation series
My new Lodge Dutch Oven in Lilac!
What I’m Cooking ✨
There is no recipe this week, but between Theo’s Italian Ricotta cookies, this cornbread, my nice olive sourdough loaf I made, and my friend Rachel’s latkes, it’s been a great week in food.
I shop Costco for pantry staples but in New York, I didn’t have the habit of it. (My mom has always shopped at Costco, so I do have a sentimental attachment.) In PR, where groceries at small chains are wildly expensive, it makes life doable, and I love never having to think about toilet paper / paper towels / garbage bags. I’m one of the people who goes to Costco and the farmers’ market, though! I wrote about it last year: https://www.aliciakennedy.news/p/from-the-kitchen-my-costco-shopping
I’m in the middle of brainstorming a piece on how to manipulate your food sourcing in the most ethical way for different budgets, balancing the ethics between the farmers market/other local-ish sources, a traditional grocery store, and Costco; how we might want to rank certain priorities and why. It is a lot of mental gymnastics, but ultimately I hope I can put it all into words that can help others make sense of the terrible predicaments that our food system has put us all in