You’ve probably noticed that every business today is obsessed with speed. Move fast, break things, scale at all costs. We are exhausted by the relentless push for hyper-growth. But what if the secret to surviving the next fifty years isn’t moving faster, but stubbornly refusing to speed up?
Look at Costco. It entered mainland China seven years ago. In that time, it has opened exactly 7 stores. Meanwhile, its rival Sam’s Club opened 10 stores in a single year. By Silicon Valley logic, Costco is failing. By real-world logic, it is building the most unassailable moat in modern retail.
Trust doesn’t scale linearly with the number of stores you open; sometimes, moving faster is the fastest way to bleed it.
To understand why Costco is deliberately slow, you have to look at its margins. In 2025, Costco’s gross margin was 11.12%. Sam’s Club sits comfortably around 20%. When you only make 11 cents on every dollar, you have zero room for error. You cannot afford premium retail rent. You cannot afford bloated supply chains. You certainly cannot afford to rush into a new city and hope for the best.
So, Costco buys the land. It builds its own warehouses. The entire cycle—from selecting a site to opening the doors—takes about three years. It is agonizingly slow. It is also the only way to keep costs low enough to honor the sacred covenant with its members: ultra-low prices.
When you run a business on an 11% margin, you aren’t playing chess. You’re walking a tightrope. One bad step on pricing, and the whole model collapses.
Costco doesn’t actually sell groceries; it sells trust. The $1.50 hot dog combo that hasn’t changed price in 40 years isn’t a loss leader. It is a physical manifestation of a promise. The entire business model hinges on the membership fee. If the customer doesn’t feel like they are getting the absolute best deal, they don’t renew. And if they don’t renew, the game is over.
This brings us to the most misunderstood metric in global retail: the renewal rate. In the US and Canada, Costco’s renewal rate is a staggering 92.2%. Globally, it sits at 89.7%. But in China? It is hovering around 60%.
The skeptics look at that 60% and see failure. They see a Western brand struggling to find product-market fit in a hyper-competitive landscape. I look at that 60% and see the largest untapped growth runway in the world.
The gap between 60% and 89.7% isn’t a sign of defeat—it’s a multi-billion dollar blueprint hiding in plain sight.
Sam’s Club is sprinting, opening dozens of stores and pushing front-end delivery. But speed has a cost. In 2026, Chinese regulators had to call in Sam’s Club leadership over repeated food safety issues. When you scale at breakneck speed, quality control is the first thing to fracture. Once that trust is gone, you can’t buy it back with a faster delivery app.
Costco’s slowness isn’t hesitation. It is a structural necessity. It is the deliberate, heavy-footed march of a company that knows its true engine isn’t store count—it is the quiet click of a member hitting ‘renew’ for the tenth year in a row.
Charlie Munger sat on Costco’s board for 26 years and vowed to hold the stock for life. He didn’t back the company because of its aggressive expansion. He backed it because of its ruthless, almost religious discipline.
In a world addicted to the sprint, the ultimate moat is the patience to walk.
FAQ
Q: Isn't Costco just losing the land grab to Sam's Club in China?
A: No. Sam's is playing a volume game with a 20% margin, allowing them to lease and expand rapidly. Costco's 11% margin forces a buy-and-build strategy. Sam's might win the next three years, but Costco is engineered to win the next thirty.
Q: What does this mean for a founder or operator?
A: If your unit economics require absolute cost control, scaling too fast will destroy your core value proposition. Growth is only beneficial if it doesn't dilute the trust you've built with your early adopters.
Q: Is the membership model actually failing in China?
A: The 60% local renewal rate vs the 89.7% global rate looks bad, but it's actually the biggest opportunity in global retail. It means Costco hasn't yet earned Chinese trust, but once it localizes its supply chain, that gap represents billions in pure profit.