Unlike other groceries, Costco isn't that reliant on low-margin, zero-margin, or loss-leader groceries (e.g. produce). They keep their costs down by having a limited selection and large, sparsely located warehouses in relatively inexpensive areas rather than traditional retail locations. Selling larger sizes and quantities of product helps to more quickly cancel out their fixed costs. They also sell much higher margin products alongside their groceries, such as electronics and appliances.