There’s a Costco in Seattle selling $20,000 diamond engagement rings. They can’t keep them in stock.
In California warehouses, $400 bottles of Dom Pérignon champagne fly off the shelves. One location sold an entire pallet of $5,000 bottles of Screaming Eagle wine in under 48 hours. Luxury watches, designer handbags when available, high-end electronics, premium mattresses: Costco is now one of America’s biggest luxury retailers. The most surprising part? Their best customers for these items are actual millionaires.
Welcome to the weirdest retail phenomenon of 2025: Costco as a luxury destination.
The Numbers Are Wild
Costco’s luxury goods sales have exploded 150% since 2020. The company now moves over $1 billion annually in products priced above $1,000, and they’re not even really trying. There’s no separate luxury section, no special marketing campaigns, no velvet ropes. The diamonds sit next to the electronics, which sit next to the bulk toilet paper.
A single Costco location in Scottsdale, Arizona, sold $4.6 million in fine jewelry last year. That’s more than many standalone luxury jewelry stores in the same market. The company’s wine selection includes bottles priced north of $10,000, and they actually sell them.
Even crazier: Costco has become the world’s largest seller of fine wine by volume. They move more Bordeaux and Napa Cab than specialty wine shops. Sommeliers shop there. Serious collectors buy there. How did a warehouse club known for $5 rotisserie chickens and 36-packs of toilet paper become a luxury powerhouse?
The Psychology of the Treasure Hunt
The secret isn’t just low prices. It’s the treasure hunt experience combined with radical trust.
Luxury retailers like Tiffany or Neiman Marcus are predictable. You know what you’ll find, it’ll be expensive, and you’ll get the full luxury retail treatment for better or worse. Costco is chaos. You never know what you’ll find. One week there’s a $12,000 Rolex. Next week it’s gone. This month there’s a full-size grand piano. Next month, who knows?
This scarcity creates urgency. When wealthy shoppers see a $4,000 Hermès-style bag at Costco for $1,500, they don’t hesitate. It won’t be there tomorrow. The fear of missing out drives immediate purchasing decisions that traditional luxury marketing spends millions trying to create.
And here’s the key: they trust it’s authentic. Costco’s return policy is legendary. They once accepted a dead Christmas tree in January, no questions asked. That trust extends to luxury goods. If Costco says it’s real, it’s real. No fakes, no scams, no authentication anxiety that plagues online resale markets.
Rich People Love a Deal More Than Anyone
One of the most enduring myths about wealthy people is that they don’t care about prices. That’s completely wrong.
Rich people care about value. They didn’t get wealthy, or stay wealthy, by overpaying for things. They just have a different calculation: time vs. money. A millionaire knows that a $15,000 engagement ring at Tiffany costs Tiffany about $6,000 wholesale. At Costco, that same ring is $8,500. Not wholesale, but closer. Same diamond, same quality, certified by independent gemologists, but without the luxury retail markup.
To wealthy shoppers, this isn’t “cheap.” It’s smart. They’re not sacrificing quality for price. They’re eliminating unnecessary middlemen and marketing costs. As one Costco luxury buyer put it: “I’m not poor. I just don’t like getting ripped off.”
This mentality explains why boring businesses are quietly creating millionaires. The wealthy understand that flashy doesn’t mean smart.
The Costco Authentication Advantage
Here’s where Costco’s model really shines: authentication and verification.
Buying luxury goods online or from unauthorized dealers is risky. Fakes are everywhere. Even “authenticated” luxury items on resale platforms sometimes turn out to be clever counterfeits. The market is full of sophisticated forgeries that can fool even experienced buyers.
Costco solves this completely. Every luxury item sold at Costco comes with third-party authentication certificates, full manufacturer warranties when available, Costco’s unconditional return policy, and paper trails that prove authenticity for insurance and resale. Buy a $10,000 watch at a grey market dealer, and you’re taking a risk. Buy it at Costco, and you can return it in six months if you change your mind.
No luxury boutique offers that kind of buyer protection. It’s a complete inversion of the traditional luxury retail model, where stores often make returns difficult and treat customers with suspicion.
Where Costco Gets Luxury Goods
So where does Costco source luxury goods? It’s a fascinating mix of channels that luxury brands officially hate but unofficially tolerate.
Gray market luxury makes up a significant portion. Authorized dealers who have excess inventory sell to Costco at a discount. The products are 100% authentic, just not sold through official brand channels. Some luxury brands partner directly with Costco for limited releases, treating it like an outlet channel for overstocked items. High-end wine and jewelry often come from estate sales and private collectors looking to liquidate quickly.
Luxury brands officially hate this because it “damages the brand.” But unofficially, many are fine with it. Costco provides a discreet outlet for overstock without public sales that hurt their retail partners. Everyone wins except the myth that luxury goods are somehow special.
The Millionaire Costco Shopper
Data reveals that 35% of Costco Executive members, the $120/year tier, have household incomes over $200,000. Many earn significantly more. These wealthy shoppers aren’t just buying luxury items. They’re buying everything at Costco. You’ll see Range Rovers and Mercedes in Costco parking lots. Doctors, lawyers, and tech executives loading $5,000 TVs next to $1.50 hot dogs.
Why? Efficiency and value. Wealthy people value their time highly, and one-stop shopping saves hours. If they can get groceries, gas, prescriptions, tires, electronics, and a $12,000 watch in a single trip, that’s worth way more than the “luxury experience” at a boutique that takes all afternoon.
Plus, Costco’s quality is consistent across the board. The produce is good, the meat is high-grade, the Kirkland private label is reliable. When you trust a retailer completely, you’ll buy everything there. That trust translates directly into larger average transactions.
Traditional Luxury Retailers Are Panicking
Costco’s luxury expansion is an existential threat to traditional high-end retailers. The battle between retail giants is expanding into territory that luxury brands assumed was safe.
Younger wealthy shoppers don’t care about prestige shopping. Gen Z and millennial millionaires are less impressed by boutique experiences and more interested in value and convenience. Online luxury retail was already eating traditional stores, and Costco is accelerating the decline from an unexpected direction.
The luxury markup is harder to justify in the information age. When customers know Costco sells the same diamond for 40% less, paying full price elsewhere feels stupid. Luxury brands have responded by trying to ban their products from Costco, often unsuccessfully, and emphasizing “experience” over product. But if the product is identical and Costco is easier and cheaper, experience only goes so far.
What This Says About Modern Luxury
The Costco luxury phenomenon reveals something important about how wealth and luxury are evolving.
Stealth wealth is in. Conspicuous consumption is out. Wealthy people increasingly prefer to signal intelligence over status. Buying smart matters more than buying flashy. Quality matters more than brand. If the diamond is identical, why pay extra for the blue Tiffany box?
Convenience is the ultimate luxury. Time is the only resource wealthy people can’t buy more of. One-stop shopping beats boutique experiences when you value hours over atmosphere. Trust beats prestige. Costco’s reputation for fairness and quality matters more than luxury brand heritage to practical-minded buyers.
The future of luxury isn’t exclusive boutiques on Madison Avenue. It’s a warehouse in suburbia selling diamonds next to bulk toilet paper, with millionaires lining up for both. If that sounds absurd, you haven’t been to Costco lately.
Sources: Costco Wholesale financial reports, RetailDive, Bloomberg, Robb Report, Wine Spectator.
