Prices typically were just 8 to 10 percent above cost, low even for wholesale. So early on, the stores decided to let in selected nonbusiness customers to take up the slack during slow periods. A lot of what small-business people buy at a warehouse store is intended for resale. A guy buying goods to stock his convenience store gets a little freaked if he sees his own customers standing next to him in line. On top of that, warehouse store operators are under pressure from the manufacturers and other suppliers they obtain goods from as well as from traditional retailers such as supermarkets.
Traditional retailers hate being undersold and give suppliers grief for trading with the enemy.
The snootier suppliers also don't like their products being sold for peanuts. Warehouse stores try to keep everybody placated by arguing that they serve a select clientele, not the hoi polloi. With their minimal markups the stores have to move a huge volume of merchandise to make money. You can't generate numbers like that if you've got 50 guys in line buying a can of beans. Significantly, Sam's, which lets in many more people than PriceCostco, has much lower per-store sales, around 44 million bucks.