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Here's What Costco Is Doing for Black Friday

Daniel B. Kline, The Motley Fool

While Costco (NASDAQ: COST) offers low prices to its members year round, it ramps things up for the holiday season. For 2017, the company kicked things off early by starting its sales on Nov. 1. That's only the beginning, however, as the membership-based warehouse club has released a Holiday Savings Book that details its offers through the season.

Why are the holidays important for Costco?

The retailer operates in a different fashion than most of its rivals. It does not make most of its profit from marking up what it sells. Instead, it makes its money from selling memberships. That means Costco doesn't live or die based on what it sells. Its success comes from enticing new members to join and old ones to renew.

The holiday season gives the warehouse club a unique opportunity to strengthen its hold on new and existing members alike. If, for example, a member visits Costco only once or twice a year, if he or she has a good experience, and feels that money was saved, then a renewal is likely. That means a single successful holiday season could be enough to convince a member that the price of a membership is worth it, even if that person rarely visits.

The exterior of a Costco with a crowded parking lot.

Costco stores will not be open on Thanksgiving, but its website will be. Image source: Costco.

What is Costco doing?

The retailer has broken its deal down along different dates, including some that run for all of November. These include savings on big-ticket items, including appliances and electronics.

For Nov. 17-22, the five days before Thanksgiving, Costco is offering special pricing on massage chairs, some beds, and a pretty random selection of merchandise -- everything from vacuums to mozzarella sticks. In addition, the retailer also has a number of televisions, TV accessories, and laptops on sale from Nov. 17 through Cyber Monday on Nov. 27.

For the Thanksgiving period itself, beginning on the holiday and running through the end of Monday, the company adds jewelry to the mix alongside more TV and electronics deals. To further complicate things, the warehouse club does have a small group of deals offered starting on Black Friday, running through Cyber Monday. And of course, during every set of deals, it also sprinkles in a selection of offers from throughout the store.

The sales that run from Thanksgiving through Cyber Monday are online only. That's because Costco will be closed on Thanksgiving, but its warehouses will open an hour early, at 9 a.m. on Black Friday.

How big is this season for Costco?

The warehouse club is trying to make the holiday season as a whole, and Black Friday weekend on its own, an event for customers. It's clearly spreading its deals out to attract repeat business, which makes sense because it could cause a flurry of activity among customers, who then may be convinced to sign on for another year.

Costco's deals are far-ranging. Few, if any, retailers offer Black Friday sales on both frozen egg rolls and a $1,900 espresso maker. That, of course, is part of the experience at Costco. In this case, the holiday book makes it so you can plan some of your bigger purchases. For the smaller stuff, however, it's perhaps more fun to just walk the aisles. 

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Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.