People Are Hooked on Costco Hearing Aids, and This Is Why
Copied from Wall Street Journal
By Julie Jargon
The buzziest place to get hearing aids? Its Costco.
The big-box chain known for bulk spaghetti and paper towels has generated a cultlike following among hearing-aid wearers. Affordable prices, a generous return policy and good customer service have spread by word-of-mouth, making Costco the country’s largest dispenser of hearing aids behind the Department of Veterans Affairs.
Hearing-loss awareness has increased in recent years because of the availability of over-the-counter hearing aids and Apple’s AirPods Pro 2, which can be turned into hearing aids. But instead of buying OTC aids or seeing an audiologist at a clinic or hospital, legions of Costco devotees swear by the retailer, which has been offering hearing aids since 1989.
Although the retailer employs some audiologists, people who visit usually see a licensed hearing-aid specialist. And Costco isn’t staffed to address ear-related medical problems such as wax buildup or balance issues.
“I had my snake-oil radar up,” says Ellis, age 67, who lives in Aldie, Va. When the hearing-aid specialist told her she had too much ear wax to conduct an accurate hearing test, Ellis was impressed the specialist didn’t just do the test anyway. After a doctor cleaned her ears, she returned to Costco for the test. She ended up with a $3,000 hearing-aid pair that syncs with her iPhone.
“There’s no stigma and no upselling,” says Ellis, who hasn’t had any issues with her hearing aids. She has since recommended Costco to a neighbor.
Low price, low pressure
The idea of inexpensive hearing aids with high-level customer service began when Sol Price, known as the father of warehouse retail stores, visited an audiologist in the San Diego area. When he saw how much hearing aids cost, he decided his Price Club stores—which later merged with Costco—could sell them for less, says Paul DiCola, assistant vice president of Costco’s hearing-aid business.
Today, Costco has hearing-aid centers in 586 of its 615 U.S. stores, as well as in 12 other countries. Costco’s volume purchasing helps it keep prices down, he says. The retailer also doesn’t pay its hearing specialists a commission, which results in customers not feeling pressured to buy hearing aids.
Costco currently offers products from three major hearing-aid brands, starting at $1,500 a pair. Costco members have up to 180 days to exchange their hearing aids or return them for a full refund. The hearing aids come with a three-year warranty. (Costco memberships start at $65 a year.) Hearing aids from an audiologist clinic can cost anywhere from $3,500 to $7,000 a pair.
Costco’s biggest competitor, the Walmart-owned Sam’s Club, has also gotten into the hearing-aid business with hearing-aid manufacturer Lucid Hearing. Together, they operate hearing centers in approximately 450 of the 600 U.S. Sam’s Clubs. Lucid hearing aids cost $1,300 to more than $4,000. (Walmart itself had sold prescription hearing aids in its health centers but stopped offering hearing services last year. It closed all health centers earlier this year.)
‘An unfair position’
Hearing specialists at Costco will clean and service hearing aids at no charge while customers shop. “Members who use our ancillary services, including the hearing-aid center, renew at a higher rate, shop more often and spend more during each visit,” DiCola said in an email.
Costco has amassed more than a 16% share of the U.S. hearing-aid market, says Abram Bailey, founder of hearingtracker.com, a website that publishes independent hearing-aid reviews from audiologists.
“There’s nothing that comes close to the pricing you get at Costco,” says Bailey, a doctor of audiology. “It’s an unfair position for anyone trying to practice audiology, but have I recommended to friends and family that they go to Costco for hearing aids? Yes, I have.”
Costco doesn’t disclose the revenue of its hearing-aid business but says it sells up to five times as many hearing aids per store, on average, than its competitors.
Stephen Martin, a retired banker and chief financial officer who lives near Scottsdale, Ariz., visited an audiologist at a large hospital more than eight years ago, after his wife told him he was turning the TV volume too high. The audiologist tried to talk him into buying a $7,000 pair of hearing aids. After that, he went to Costco. The hearing specialist told him he didn’t need hearing aids.
Six months later, he returned for another test, which showed he was on the cusp of needing assistance. The specialist offered him a pair to wear around the store. Martin picked up on sounds he couldn’t hear before and decided to buy them. Now 79, he’s on his second pair of Costco hearing aids, which cost him $1,500.
He also proves the company’s business model: “Every time I walk in that store to get something done to my hearing aids, I buy other stuff,” he says.