Costco to accept food stamps

Call it a sign of the times -- or at least a sign of the lingering effects of the recession and ongoing unemployment. According to several media sources, Costco (COST), the big box discount retailer, will begin taking food stamps at some locations.

Nearly 36 million Americans use food stamps, but the Costco decision is odd. While Wal-Mart (WMT), which does accept food stamps, is considered a shopping center for relatively low-income consumers, Costco has maintained an image of catering to the fairly affluent. The number of high-end shoppers must have fallen enough that Costco wants to bring in a new category of customers.

The Costco action, taken ahead of the holidays, is another example of the pressure in the retail industry as it enters its busiest season. For many stores, the last two months of the year can pull in 40 percent of annual sales. Costco cannot afford to forgo any reasonable plan to bring in more customers.

Costco is also watching Wal-Mart's remarkable aggressive price-cutting on everything from toys to e-books. That is likely to pull a lot of customers away from other big box retailers, including Costco. Suddenly, taking food stamps has become a marketing tool.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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