Costco's key edge sets it apart from Walmart, Target, Kroger

Costco's treasure hunt model drives membership during strong economic times, but the chain's low prices push people toward the warehouse club during more challenging times.

"We think the company continues to deliver compelling value, quality, and newness," UBS analysts wrote after the warehouse club reported its April sales. "As a result, its customers continue to consolidate their shopping at this retailer."

Costco has been steadily adding share for five years, growing at a pace that was only behind one rival.

"According to Numerator's data, Walmart, in a finding that will surprise no one, gained the most grocery market share over the last five years of any major player," Grocery Dive reported.

The warehouse club has made steady gains.

"But hot on its heels was club giant Costco, which went from a 7% share in the 2020-2021 period to an 8.4% share in the 2024-2025 period. It was the only retailer in the top 20 that made market share gains each year.

That's not surprising when you look at Costco's pricing compared to its rivals.

Costco offers the lowest grocery prices

While Costco does not offer the same selection as a traditional grocery store, it does offer better prices, according to a study commissioned by Consumer Reports.

The consumer advocate company worked with Strategic Resource Group (SRG), a retail- and grocery-industry market research company in New York, compared prices on baskets of commonly purchased items at mainstream grocery chains in six regionally representative cities across the U.S.

Related: History of Costco: Company timeline and facts

"The comparisons were based on the total price of grocery baskets that included packaged goods, produce, and meat, but differed in size depending on which items were available in each store. The comparisons were most robust for mainstream retailers carrying a wide selection of identical national-brand goods that could be compared across supermarkets," Consumer Reports shared.

Walmart was used as the baseline and Costco, along with Walmart's own Sam's Club had dramatically lower prices.

Grocery prices compared to Walmart

• Costco: -21.4%
• BJ's Wholesale: -21%
• Target: +5.9%
• Kroger: +14.8%
• Publix: +20.3%
  
  Source: Consumer Reports

In addition to Costco and BJ's, only Lidl (-8.5%), Aldi (-8.3%), Winco (-3.3%), and H-E-B (-0.2%) were priced below Walmart. Sam's Club, which is owned by Walmart, was not included in the research. Market Basket (+1.2%) was the only regional grocery chain not priced at least 8% higher than Walmart.

Costco commits to low prices

Costco CEO Ron Vachris talked about his chain's continued plans to invest in both expaning the business and keeping prices low during the company's second-quarter earnings call.

"As far as investing in the business, seeing the same values in that, no, we feel that we still get the same return from our members as we continue to invest in the business out there. And the members are responding very nicely to it, both with traffic and with sales that we see as well. So we feel good that we will continue to reinvest," he said.

CFO Gary Millerchip also commented on keeping prices down in a non-grocery area that has become increasingly important to customers.

"We want to be the pricing authority on gas. And so when prices are higher, that will tend to cause members to maybe take the extra mile that it might be involved to get to the gas station because of the incremental value they see there," he said.

JPMorgan analyst Christopher Horvers has described Costco as offering "the best pricing," underscoring how its low-margin model allows it to consistently undercut traditional grocery retailers.

"[Costco] offers an unquestioned value prop with the best pricing, curated assortment, strong private label offering and treasure hunt atmosphere," Horvers wrote in a note to clients as reported by CNBC.

Related: McDonald's makes menu changes as beef prices skyrocket

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This story was originally published April 18, 2026 at 4:52 PM.