Costco’s strategy is built on a differentiated model for the mature, highly competitive retail industry. The firm earns most of its operating profit from membership fees, enabling it to sell merchandise at near-break-even prices. This reinforces its reputation as a price-leader, drives recurring traffic, and keeps renewal rates around 90%. We believe rising executive membership penetration (with 3 times higher average customer spending) strengthens this high-margin, predictable revenue stream, cementing itself as an industry leader with over 60% share of the domestic warehouse club market.