Are You a Victim of the "Costco Effect"?
- Melissa Hughes
- Mar 1
- 4 min read
Have you ever walked into a store planning to buy just one or two things and walked out an hour later with a whole shopping cart full of stuff? It's called "the Costco effect" and it's a masterful psychological journey that many of us never even notice.
The Costco Effect is one of many neuroscience secrets that influence our behavior as consumers. The Costco Effect begins the moment you walk into the store. Even if you have a list and you know exactly where to find every item on that list, Costco has a plan for your shopping experience.
Anchoring: The Price Game That Warps Our Perception
From the moment you step in, retailers plant mental anchors. For example: those big-ticket electronics or jewelry displays greet you first. Most of us don't have a big screen television or diamond ring on our shopping lists. That really doesn't matter. Just walking by that section, our brains are unconsciously primed with the high-priced items making that $29 can of peanuts seem like... well, peanuts in comparison.
That’s the anchoring effect — a close cousin of the decoy effect, another powerful influence on consumer decision making— you subconsciously use a high “anchor” to judge all subsequent prices.
The Loss-Leader Chicken & the “Willingness Walk”
One of the most famous Costco tricks is its rotisserie chicken: sold for $4.99 (same price since 2009!) at a loss of roughly $35 million a year. Yet it’s a genius move. Why? To make you walk through their entire store. That path leads you past all the things you didn’t even know you needed — and you pick them up, little by little.
As the name implies, a loss leader is supermarket-speak for a product sold below its market value to attract customers to the store. They don't mind losing money on the chicken because they know that to get to it, you have to pass by a million other things you didn't know you needed and drop into the cart. The most frequented, sought-after items are hidden in the furthest corners so you have to traverse the entire store to find them.
Less Is More: The Paradox of Choice
You might assume that more variety is better. But research shows that once options exceed a certain threshold, more choice → decision fatigue → fewer purchases. When Costco only offers 2–3 types of pickles instead of 20, you're more likely to make a quick decision and feel satisfied with it.
This is the Paradox of Choice at work. Above a certain number of options, choices no longer liberate us but debilitate us. The less choice you have, the more quickly you are likely to decide and be happy with that decision.
Scarcity & Impulse: The “Now or Never” Effect
Have you ever seen a deal and thought, “I might as well grab it — it won’t be here next time”? We assume that rare = valuable, and fear missing out.
Humans have a strong scarcity bias and we assume things that are scarce are valuable and things that are abundant are not.The impulsivity of the scarcity bias frequently kicks in when we think product is in short supply and we might miss a great deal unless we buy it now.
Priming: Invisible Nudges That Steer You
Many stores and restaurants use an assortment of psychological tricks, or priming, to get you to spend more money than you planned. Whole Foods leads the pack in consumer priming. What do you see first when you walk into the store? Fresh cut flowers. Advertisers call this an example of “symbolics” or unconscious suggestions. In this case, Whole Foods wants us to know the store is bursting with freshness.
The way the produce is displayed in wooden crates and baskets is folksy and homey - like you just missed Farmer Al dropping off his freshly picked cukes and maters. And have you wondered who gets to hand chalk all of those signs? (Here's a hint - it's not chalk and they aren't handwritten; it's paint and they are mass produced in a factory.)
And the misters that keep certain vegetables glistening? It's not to keep them fresh; it's so you and I associate them with freshness and purity. Ironically, that constant water supply actually reduces the shelf life of the veggies.
All of these psychological tricks are examples of priming. Malcolm Gladwell, author of the bestselling book Blink: The Power of Thinking Without Thinking, described priming this way:
"What we think of as freewill is largely an illusion: much of the time, we are simply operating on automatic pilot, and the way we think and act—and how well we think and act on the spur of the moment—are a lot more susceptible to outside influences than we realize."
So... What Do You Do About It?
You can’t (and shouldn’t) avoid shopping. But you can shop smarter:
The Costco Effect is more than a cute retail trick. It’s a lesson in human behavior — how our brains can be nudged, anchored, and primed into decisions we’d never consciously choose. Recognizing those mechanisms gives you the power to shop with intention, not autopilot.
Well-written!
It's happened to me more than once. All marketers use buyer psychology, and successfully at that. We don't notice how we make unnecessary purchases. Especially when the store sells everything from groceries to furnishings and appliances.