A specialty shop can probably survive Costco much more easily than they can survive Walmart or any other conventional (American) grocery store. The grocery store carries 20 or 30 different olive oils, to select one example. Odds are all the snobbiest will find something they like... odds are even decent that in a blind taste test even the snobbiest would find something that they would be horrified to discover came from a normal grocery store.
Costco carries one or two options for a given thing, and are outright missing many things you might want. As nice as Costco is for buying things on a budget when you're going to use them up fully, I think it would be a bit of a challenge to make them your only grocery source. Doable as a sort of self-imposed challenge, no problem, there's certainly enough for that, but you'd be missing a lot of things, and/or wasting money on huge quantities of things you won't use. The quality is generally pretty decent (I may have more brand loyalty for "Kirkland" than almost any other brand) but not necessarily the most premium options. If you are the type to even consider the specialty shop in the first place you're more likely to be unsatisfied by Costco than a grocery store.
Costco is for bulk staples and commodities for me. Products that I really don't need the best of the best for, good enough is good enough and as long as I can use it all before it goes bad, I'd rather not waste more thought than needed for it. Milk, eggs, flour, flowers, microfiber towels, batteries, salt and pepper.
Then for all the niche stuff that I do truly care about, there's the specialty stores or really the farmer's market. That's where I'll indulge for the first press seasonal olive oils, all sorts of pluot/apriplums/plumpicots combinations, short shelf life wild berries, blueberry/orange/mint blossum honey and whatnot.
> Costco is for bulk staples and commodities for me
> Milk, eggs, flour, flowers, microfiber towels, batteries, salt and pepper
If you can walk out of Costco month after month with just those essentials, and never pick up any of the nice-looking and reasonably-priced goodies there, I think it's safe to say that you have the level of discipline required to be financially successful and not have to care about whether you're getting the best price per unit of whatever it is you're buying. :-)