Why Costco Is a Retiree's Dream Stock
Costco (NASDAQ: COST) has built a nearly invulnerable business that's more or less immune to the changing retail environment. The warehouse club uses a fairly simple model: People pay an annual fee to join, and in exchange, they get to shop at the company's "clubs," where products are very inexpensive.
It's a model that has proven extremely resistant to competition and online shopping. Members pay to join, and because they have paid, they feel connected to the stores -- and those membership fees make up most of the chain's profit.
That bond drives traffic, and even when it doesn't, the model still works. Even when someone pays to join but does not visit Costco, they may still renew because of the prospect of saving money the next time around.
Source Fool.com
