October 29, 2009 in Business

Costco stores to start accepting food stamps

Sarah Skidmore And Dan Sewell Associated Press
Associated Press photo

People shop at the Costco Wholesale store in Burbank, Calif. Costco said Wednesday it will start accepting food stamps at its warehouse clubs nationwide after testing them at New York stores.
(Full-size photo)

PORTLAND – With many families suddenly struggling to feed themselves, the big warehouse clubs known for king-size packages of steak and jumbo boxes of Cheerios are increasingly competing with grocery stores for the 36 million Americans now on food stamps.

Costco Wholesale Corp. said Wednesday that it would start accepting food stamps at its warehouse clubs nationwide after testing them at stores in New York. That is a big about-face for a chain that has catered to the bargain-hunting affluent with its gourmet foods, and a reflection of the fact that food-stamp use has hit new highs.

Costco joins warehouse club competitor BJ’s Wholesale Corp., which started taking food stamps last April, and Sam’s Club, which began accepting them in the fall of 2008.

“The rules are different today,” CEO Jim Sinegal said. “People who were in good shape financially all of the sudden are needing some assistance.”

Sinegal said he expects Costco to accept food stamps in at least half its roughly 410 U.S. stores by Thanksgiving, including its 28 locations in Washington state.

It is unknown at this time whether Idaho locations will be among those early stores accepting food stamps, a Costco spokesman said Wednesday.

Up until recently, some wholesale clubs were skeptical poor people would be willing to pay the $50-a-year membership fee or would be interested in buying food in the bulk quantities for which the stores are famous.

But in this economy stores are battling for every dollar and see a big potential market in the growing ranks of food-stamp recipients. From warehouse clubs to supermarkets and mom-and-pop groceries, stores are retraining their cashiers and hanging new signs to welcome such customers.

“Certainly this economy was a wake-up call,” Costco chief financial officer Richard Galanti recently told investors. “It is not just very low-end economic strata that are using these.”

The rolls of food-stamp recipients have grown by 10 million over the past two years.

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