If you enjoy shopping around and comparing pricing, it's not the best option. But if you just want to buy a product and know you won't be ripped off, you can shop there and never have to think about it. That allows people who don't enjoy shopping to save a lot of time and mental energy.
I've run into plenty of counterexamples to the last claim.
Good example:
I bought two collapsible milk crates. They loaded all my groceries into them in the store.
When I got home and lifted the first crate out of the car, it had too much weight inside, the bottom fell out and two bottles of wine shattered.
I told them the story when returning the crate two weeks later, they waved me off when I said I had a pic, told me it wasn’t necessary, and refunded the wine without being prompted.
Trying to get wine refunded with most other retailer would probably require talking to a manager and making a scene.
Kerrygold butter is cheaper at Walmart.
Organic chicken stock is cheaper at Whole Foods.
Organic diced tomatoes at Costco however are very well priced.
I have rarely found Costco items more expensive than other local stores, at least for my regular items.
I discount Trader Joe’s since they don’t carry branded items other than wine and beer.
And 2.50/bar at Walmart here
(What I actually buy now is the French cultured butter from trader Joe's though, which is v good)
They carry a variety of branded items including Kerrygold, Tilamook, Rouge et Noir (Bay Area cheese maker), those kringles, Spindrift, Columbus (lunchmeat), those organic herbs, and Tom's of Maine (hygiene). There's probably a few more.
On the bright side, the no-name brand butter is almost as good here, so it's not a total wash.
If you buy Better than Bouillon at Costco, you can get a pound of the stuff for about $6, which is double the quantity that you find at most other grocery stores.
I stopped buying liquid stock after I found that stuff, because it's so much cheaper.
I believe this is a general phenomenon and I read years ago about someone studying it in grocery stores. I'm not sure to what extent it is emergent vs. rationally thought out, but direct competitors tend to evolve to give you just enough good options to get you in the store, and as many bad deals as you are likely to go with just because you are in the store. Being uniformly better is not necessary to compete and therefore suboptimal.
In LA, Costco isn't always the cheapest on a per-unit basis, but they're always the cheapest on a per weight/per ounce basis.
For example, Kerrygold butter is $5 at the Ralphs, and the same size container is $8 at the nearest Whole Foods. It's $16 at Costco...but for 4x the amount of butter, making it cheaper than both Ralphs and Whole Foods if you can actually use all that butter. (There are no nearby Walmarts, and neither of the local Targets or Food4Less' sell Kerrygold.)
It’s not that bulk. Chips come in bigger bags - use a clip. Bread comes two loaves, freeze one. It’s very rare I see something but it’s an unusable quantity for a family of four.
Now that said, when I lived in a tiny apartment getting 36 rolls of toilet paper at once was annoying, but I made it work.
Also, frozen bread is an indignity that no one should have to suffer. Unless you are very very poor just pay the extra dollar and eat fresh bread.
Large families (4+ people) can easily get through Costco sized bread, milk, cereal, snacks, fruit, meat and veggies before it goes bad.
For a single or 2 person household, pretty much the only things from Costco that it doesn't make sense to buy are fresh produce, meat, and seafood, and bread.
Costco often as Prime beef that's ~$18/Lb. Whole Foods for USDA Prime is often $30+.