Costco's fiscal 2025 Form 10-K says its core warehouse business carried fewer than 4,000 active items per warehouse. The same filing describes low prices, limited selection, high volume and rapid inventory turnover as linked parts of its model. Its online assortment averaged about 9,000–10,000 items, so “fewer choices” applies especially to the core warehouse format. Costco filing.
The narrow shelf is an operating choice. Concentrating sales among selected products can support purchasing scale and simpler handling. A member then expects repeat value from the overall offer. Costco reported $5.323 billion of membership-fee revenue in FY2025 and an 89.8% worldwide renewal rate. Neither figure is net profit, and a trailing renewal rate is not a prediction about any one member.
The fit to test
| Choice | Possible benefit | Trade-off |
|---|---|---|
| Fewer core items | Concentrated buying and turnover | Missing the option a shopper wants |
| Warehouse efficiency | Lower handling cost per selected item | Less flexibility in presentation or range |
| Paid membership | Ongoing relationship and fee revenue | The value promise must be earned again |
These are strategic links inferred from the company's disclosed model. The filing does not isolate a causal effect for each activity. It also reports FY2025 net sales of $269.912 billion and an 11.12% gross margin on net sales; gross margin still precedes other operating costs.
For a smaller business, the useful exercise is an assortment audit. Which variants sell, which tie up cash, and which missing option causes a customer to leave? Test substitution and return visits before cutting products. A membership fee should follow a compelling repeat benefit; it cannot create that benefit by itself.