![Costco's original logo 2010-01-16](https://upload.wikimedia.org/wikipedia/commons/8/86/Costco%27s_original_logo_2010-01-16.png)
Costco Wholesale Corporation (
doing business as
A trade name, trading name, or business name, is a pseudonym used by companies that do not operate under their registered company name. The term for this type of alternative name is a "fictitious" business name. Registering the fictitious name w ...
Costco Wholesale and also known simply as Costco) is an American
multinational corporation
A multinational company (MNC), also referred to as a multinational enterprise (MNE), a transnational enterprise (TNE), a transnational corporation (TNC), an international corporation or a stateless corporation with subtle but contrasting senses, i ...
which operates a chain of membership-only
big-box retail stores The retail format (also known as the retail formula) influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services are ...
(
warehouse club
A warehouse club (or wholesale club) is a retail store, usually selling a wide variety of merchandise, in which customers may buy large, wholesale quantities of the store's products, which makes these clubs attractive to both bargain hunters ...
). As of 2022, Costco is the fifth largest retailer in the world and is the world's largest retailer of
choice and prime beef,
organic foods
Organic food, ecological food or biological food are food and drinks produced by methods complying with the standards of organic farming. Standards vary worldwide, but organic farming features practices that cycle resources, promote ecological ...
,
rotisserie chicken
Rotisserie chicken is a chicken dish that is cooked on a rotisserie by using direct heat in which the chicken is placed next to the heat source.
Electric- or gas-powered heating elements may be used by using adjustable infrared heat. These type ...
, and wine .
In 2021, Costco was ranked #10 on the
Fortune 500
The ''Fortune'' 500 is an annual list compiled and published by ''Fortune'' magazine that ranks 500 of the largest United States corporations by total revenue for their respective fiscal years. The list includes publicly held companies, along ...
rankings of the largest United States corporations by total revenue.
Costco's worldwide headquarters are in
Issaquah, Washington
Issaquah ( ) is a city in King County, Washington, United States. The population was 40,051 at the 2020 census. Located in a valley and bisected by Interstate 90, the city is bordered by the Sammamish Plateau to the north and the "Issaquah Alp ...
, an
eastern suburb of Seattle, although its Kirkland Signature house label bears the name of its former location in
Kirkland. The company opened its first ''warehouse'' (the chain's term for its retail outlets) in Seattle Through mergers, however, Costco's corporate history dates back to 1976, when its former competitor
Price Club
Price Club was an American warehouse club, warehouse store chain. It merged with its competitor, Costco, Costco Wholesale, in 1993 and adopted the Costco name in 1997. The original Price Club warehouse is still open, operating as Costco location # ...
was founded in
San Diego, California
San Diego ( , ; ) is a city on the Pacific Ocean coast of Southern California located immediately adjacent to the Mexico–United States border. With a 2020 population of 1,386,932, it is the eighth most populous city in the United States ...
.
, Costco has 842 warehouses worldwide:
579 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 18 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China, and one each in Iceland, New Zealand and Sweden.
History
Price Club
Costco's earliest predecessor,
Price Club
Price Club was an American warehouse club, warehouse store chain. It merged with its competitor, Costco, Costco Wholesale, in 1993 and adopted the Costco name in 1997. The original Price Club warehouse is still open, operating as Costco location # ...
, opened its first store on July 12, 1976, on Morena Boulevard in
San Diego, California
San Diego ( , ; ) is a city on the Pacific Ocean coast of Southern California located immediately adjacent to the Mexico–United States border. With a 2020 population of 1,386,932, it is the eighth most populous city in the United States ...
. It was founded three months earlier by
Sol Price
Sol Price (January 23, 1916December 14, 2009) was the founder of FedMart, Price Club (which ultimately merged into Costco) and PriceSmart. He is considered a pioneer of the " warehouse store" retail model.
Early life and education
Price was bor ...
and his son, Robert, following a dispute with the new owners of
FedMart, Price's previous membership-only discount store.
Price Club was among the first retail
warehouse club
A warehouse club (or wholesale club) is a retail store, usually selling a wide variety of merchandise, in which customers may buy large, wholesale quantities of the store's products, which makes these clubs attractive to both bargain hunters ...
s, beginning with its Morena Boulevard store inside a series of old
airplane hangar
A hangar is a building or structure designed to hold aircraft or spacecraft. Hangars are built of metal, wood, or concrete. The word ''hangar'' comes from Middle French ''hanghart'' ("enclosure near a house"), of Germanic origin, from Frankish ...
s once owned by
Howard Hughes
Howard Robard Hughes Jr. (December 24, 1905 – April 5, 1976) was an American business magnate, record-setting pilot, engineer, film producer, and philanthropist, known during his lifetime as one of the most influential and richest people in th ...
.
The store, known as Costco Warehouse #401, is still in operation today.
Price Club's sales model targeted
small business
Small businesses are types of corporations, partnerships, or sole proprietorships which have fewer employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being able to ap ...
owners, selling items in bulk for a discounted price at no-frills outlets that were accessible only with an annual membership fee.
The company launched an
initial public offering
An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
in 1980 and expanded to 24 locations in the Southwest and 1.1 million members by early 1986.
Price Club expanded into Canada in 1986, opening a store in
Montreal
Montreal ( ; officially Montréal, ) is the List of the largest municipalities in Canada by population, second-most populous city in Canada and List of towns in Quebec, most populous city in the Provinces and territories of Canada, Canadian ...
, followed by a
Mexico City
Mexico City ( es, link=no, Ciudad de México, ; abbr.: CDMX; Nahuatl: ''Altepetl Mexico'') is the capital and largest city of Mexico, and the most populous city in North America. One of the world's alpha cities, it is located in the Valley o ...
store in 1992 as part of a
joint venture
A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to acces ...
with hypermarket chain
Controladora Comercial Mexicana
Comercial City Fresko, S. de R.L. de C.V. is a Mexican holding company of hypermarkets headquartered in Mexico City, Mexico. It operates the hypermarkets La Comer, City Market, Fresko and Sumesa, which have a strong presence in Mexico City and ...
.
The company also announced plans to open stores in Spain and Portugal through their Canadian subsidiary.
Costco opens
Jim Sinegal
James D. "Jim" Sinegal (born January 1, 1936) is an American billionaire businessman who is the co-founder and former CEO of the Costco Wholesale Corporation,Allison, Melissa"Costco's colorful CEO, co-founder Jim Sinegal to retire" ''The Seattle ...
and
Jeffrey H. Brotman opened the first Costco warehouse in Seattle on September 15, 1983.
Sinegal had started in wholesale distribution by working for Sol Price at
FedMart; Brotman, an
attorney
Attorney may refer to:
* Lawyer
** Attorney at law, in some jurisdictions
* Attorney, one who has power of attorney
* ''The Attorney'', a 2013 South Korean film
See also
* Attorney general, the principal legal officer of (or advisor to) a gove ...
from an old Seattle retailing family, had also been involved in retail distribution from an early age. During this time, small businesses were given an 8% or 9% discount on
inventories
Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation.
Inventory management is a discipline primarily about specifying the shap ...
. He began his retail involvement as a
grocery bagger. A second store opened in
Portland
Portland most commonly refers to:
* Portland, Oregon, the largest city in the state of Oregon, in the Pacific Northwest region of the United States
* Portland, Maine, the largest city in the state of Maine, in the New England region of the northeas ...
in October, and a third in
Spokane
Spokane ( ) is the largest city and county seat of Spokane County, Washington, United States. It is in eastern Washington, along the Spokane River, adjacent to the Selkirk Mountains, and west of the Rocky Mountain foothills, south of the Ca ...
in The company
went public in 1985.
The company was initially headquartered at its first warehouse in Seattle, but moved its headquarters to Kirkland in 1987.
The "PriceCostco" merger
In 1993, Costco and Price Club agreed to merge operations themselves after Price declined an offer from
Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
to merge Price Club with their warehouse store chain,
Sam's Club
Sam's West, Inc. (doing business as Sam's Club) is an American chain of membership-only retail warehouse clubs owned and operated by Walmart Inc., founded in 1983 and named after Walmart founder Sam Walton as Sam’s Wholesale Club. , Sam's Cl ...
. Costco's business model and size were similar to those of Price Club, which made the merger more natural for both companies.
The combined company took the name PriceCostco, and memberships became universal, meaning that a Price Club member could use their membership to shop at Costco and vice versa. PriceCostco boasted 206 locations generating $16billion in annual sales.
[ PriceCostco was initially led by executives from both companies, but in 1994, the Price brothers left the company to form PriceSmart,] a warehouse club chain in Central America and the Caribbean unrelated to the current Costco.
In 1996, Costco moved its headquarters from Kirkland to Issaquah.
In 1997, Costco changed its name to Costco Wholesale Corporation, and all remaining Price Club locations were rebranded
Other company milestones
In 2005, Costco replaced its first Seattle warehouse with a new warehouse on an adjacent lot. The company was able to arrange to keep the same address for the new building.
On April 26, 2012, CNBC
CNBC (formerly Consumer News and Business Channel) is an American basic cable business news channel. It provides business news programming on weekdays from 5:00 a.m. to 7:00 p.m., Eastern Time, while broadcasting talk sho ...
premiered its documentary, ''The Costco Craze: Inside the Warehouse Giant''.
In 2014, Costco was the third largest retailer in the United States. That year Costco announced plans to open an online store in China using Alibaba Group.
Costco announced the opening of 29 new locations in 2016, the most in one year since 2007. Span Construction, led by King Husein, has constructed almost all of Costco's buildings since 1989.["King Husein: On the back of a simple concept, Husein has built a business that has transformed an industry"]
, ''Metal Construction News'', October 31, 2014. Retrieved on March 27, 2020.
Costco opened its first warehouse in China on August 27, 2019, in Shanghai. The store's opening garnered much attention, which led to its opening day being cut short over safety concerns.
The first Costco in New Zealand was first opened at West Auckland in September 2022, delayed from mid-August due to the economic impact of the COVID-19 pandemic
The COVID-19 pandemic has had far-reaching economic consequences including the COVID-19 recession, the second largest global recession in recent history, decreased business in the services sector during the COVID-19 lockdowns, the 2020 stock ...
.
Costco today
In the United States, Costco's main competitors operating membership warehouses are Sam's Club
Sam's West, Inc. (doing business as Sam's Club) is an American chain of membership-only retail warehouse clubs owned and operated by Walmart Inc., founded in 1983 and named after Walmart founder Sam Walton as Sam’s Wholesale Club. , Sam's Cl ...
(a subsidiary of Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
) and BJ's Wholesale Club
BJ's Wholesale Club Holdings, Inc., commonly referred as BJ's, is an American membership-only warehouse club chain based in Marlborough, Massachusetts, operating on the East Coast of the United States in addition to Ohio, Michigan, and Indiana. ...
. Costco employs 304,000 full and part-time employees
Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...
worldwide. In 2016, Costco had 86.7million members. This increased to 90.3million members in 2017. and 94.3million in 2018. In 2019, Costco had 98.5million members. In 2020, Costco had 105.5million members. In 2021, Costco had 111.6million members. , Costco has 118.9million members.
Costco was the first company to grow from zero to $3billion in sales in under six years.[ For the fiscal year ending on August 31, 2012, the company's sales totaled $97.062billion, with $1.709billion net profit.] , Costco is ranked #14 on the Fortune 500
The ''Fortune'' 500 is an annual list compiled and published by ''Fortune'' magazine that ranks 500 of the largest United States corporations by total revenue for their respective fiscal years. The list includes publicly held companies, along ...
rankings of the largest United States corporations by total revenue. The ACSI (The American Customer Satisfaction Index) named Costco number one in the specialty retail store industry with a score of 84 in 2014.
From December 2013, Costco's board of directors was chaired by co-founder Jeffrey H. Brotman and included James Sinegal, co-founder and director, and two officers of the company: president/CEO W. Craig Jelinek and CFO Richard A. Galanti. On August 1, 2017, Jeffrey Brotman died. , James Sinegal and W. Craig Jelinek remained on the board. Jim Sinegal stepped down in 2018.
Locations
, Costco has 842 warehouses worldwide:
* 579 in the United States and Puerto Rico
* 107 in Canada
* 40 in Mexico
* 31 in Japan
* 29 in the United Kingdom
* 18 in Korea
* 14 in Taiwan
* 13 in Australia
* 4 in Spain
* 2 in France
* 2 in China
* 1 in Iceland
* 1 in New Zealand
* 1 in Sweden
International locations
Warehouses outside the U.S. are similar to the company's domestic locations, featuring generally identical layout, signage, and even parking lot markings. Food court menus are tailored to international tastes, with meat pies
A meat pie is a pie with a filling of meat and often with other savory ingredients. They are found in cuisines worldwide.
Meat pies are usually baked, fried, or deep fried to brown them and develop the flavour through the Maillard reaction. Ma ...
on offer in Australia; poutine
Poutine () is a dish of french fries and cheese curds topped with a brown gravy. It emerged in Quebec, in the late 1950s in the Centre-du-Québec region, though its exact origins are uncertain and there are several competing claims regarding it ...
in Canada and France; seafood-topped pizza in Asian locations; pastor taco-topped pizzas in Mexico; clam chowder
Clam chowder is any of several chowder soups in American cuisine containing clams. In addition to clams, common ingredients include diced potatoes, salt pork, and onions. Other vegetables are not typically used. It is believed that clams were us ...
in Japan, South Korea, and Taiwan; plokkfiskur in Iceland; and jacket potatoes in the UK. Additionally, Costco has led a strategic initiative to enhance the merchandise mix available at international warehouses by tailoring products to local tastes, offering a selection of both American and local products.
In Canada, it is a participant in the voluntary Scanner Price Accuracy Code
The Scanner Price Accuracy Code is a Canadian retail voluntary practice managed by the Retail Council of Canada and endorsed by the Competition Bureau. It was introduced in June 2002 as Canadian retailers were in the midst of updating their point- ...
managed by the Retail Council of Canada
The Retail Council of Canada (french: Conseil canadien du commerce de détail), founded in 1963, is a not-for-profit trade association representing retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, ...
.
Largest and smallest locations
In 2005, the world's largest Costco by square feet was warehouse #692 in Hillsboro, Oregon
Hillsboro ( ) is the fifth-largest city in the U.S. state of Oregon and is the county seat of Washington County. Situated in the Tualatin Valley on the west side of the Portland metropolitan area, the city hosts many high-technology companies, ...
. In 2015, Costco completed an expansion in Salt Lake City
Salt Lake City (often shortened to Salt Lake and abbreviated as SLC) is the Capital (political), capital and List of cities and towns in Utah, most populous city of Utah, United States. It is the county seat, seat of Salt Lake County, Utah, Sal ...
, Utah, United States, making it the new largest Costco at . In 2019, Costco opened its biggest store in Canada, in St. John's; the store is .
In 2011, Costco's highest volume store was in Seoul, South Korea. In 2018, Taiwan's Taichung ranked at the top in the number of members and was second in the world in sales volume, behind South Korea's Yangjae store in Seoul. Of the 14 Costco operations in Taiwan, three – Taichung, Neihu, and Chungho – ranked in the top 10 in the world in sales volume.
, the smallest Costco is in Juneau, Alaska
The City and Borough of Juneau, more commonly known simply as Juneau ( ; tli, Dzánti K'ihéeni ), is the capital city of the state of Alaska. Located in the Gastineau Channel and the Alaskan panhandle, it is a unified municipality and the se ...
.
Costco Business Centers
Costco Business Centers are warehouses similar to regular Costco warehouses, and are open to all Costco members, regardless of membership type. Their merchandise caters predominantly to enterprises, with a focus on small business
Small businesses are types of corporations, partnerships, or sole proprietorships which have fewer employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being able to ap ...
es. Business Centers do not carry most consumer items like clothing, jewelry, media, and tires, while carrying larger quantities and more options for the business products they do carry. More than 70% of the items that can be acquired from a Costco Business Center cannot be found in a typical Costco store. Some locations do have a food court, a gas station, or both. Unlike regular warehouses, most Costco Business Centers have a Print & Copy Center which provides printing professional services. They have large parking space
A parking space, parking place or parking spot is a location that is designated for parking, either paved or unpaved. It can be in a parking garage, in a parking lot or on a city street. The space may be delineated by road surface markings. ...
s for trucks and are capable of delivering goods to businesses in bulk quantities, with a delivery charge of $25 for orders that are below $250. Costco Business Center operating hours are shorter than regular warehouses (usually opening at 7:00 am on Mondays to Saturdays and closed on Sundays), while discounts and coupons for Business Centers are issued separately from regular warehouses.
Locations
, there are 22 Costco Business Centers in the United States, located in Orlando, Florida
Orlando () is a city in the U.S. state of Florida and is the county seat of Orange County, Florida, Orange County. In Central Florida, it is the center of the Greater Orlando, Orlando metropolitan area, which had a population of 2,509,831, acco ...
; Stafford, Texas
Stafford is a city in the U.S. state of Texas, in the metropolitan area. The city is mostly in Fort Bend County, with a small part in Harris County. As of the 2020 census, Stafford's population was 17,666, down from 17,693 at the 2010 census.
H ...
; Dallas, Texas
Dallas () is the third largest city in Texas and the largest city in the Dallas–Fort Worth metroplex, the fourth-largest metropolitan area in the United States at 7.5 million people. It is the largest city in and seat of Dallas County w ...
; Minneapolis, Minnesota
Minneapolis () is the largest city in Minnesota, United States, and the county seat of Hennepin County. The city is abundant in water, with thirteen lakes, wetlands, the Mississippi River, creeks and waterfalls. Minneapolis has its origins ...
; Phoenix, Arizona
Phoenix ( ; nv, Hoozdo; es, Fénix or , yuf-x-wal, Banyà:nyuwá) is the List of capitals in the United States, capital and List of cities and towns in Arizona#List of cities and towns, most populous city of the U.S. state of Arizona, with 1 ...
; California (Commerce
Commerce is the large-scale organized system of activities, functions, procedures and institutions directly and indirectly related to the exchange (buying and selling) of goods and services among two or more parties within local, regional, nation ...
, Hawthorne
Hawthorne often refers to the American writer Nathaniel Hawthorne.
Hawthorne may also refer to:
Places
Australia
*Hawthorne, Queensland, a suburb of Brisbane
Canada
* Hawthorne Village, Ontario, a suburb of Milton, Ontario
United States
* Hawt ...
, Hayward, North Hollywood
North Hollywood is a neighborhood of Los Angeles, California, located in the San Fernando Valley. The neighborhood contains the NoHo Arts District, the El Portal Theatre, several art galleries, and the Academy of TV Arts and Sciences. The North ...
, Sacramento
)
, image_map = Sacramento County California Incorporated and Unincorporated areas Sacramento Highlighted.svg
, mapsize = 250x200px
, map_caption = Location within Sacramento ...
, San Diego
San Diego ( , ; ) is a city on the Pacific Ocean coast of Southern California located immediately adjacent to the Mexico–United States border. With a 2020 population of 1,386,932, it is the List of United States cities by population, eigh ...
, South San Francisco
South San Francisco is a city in San Mateo County, California, United States, located on the San Francisco Peninsula in the San Francisco Bay Area. The city is colloquially known as "South City". The population was 66,105 at the 2020 census. ...
, Ontario
Ontario ( ; ) is one of the thirteen provinces and territories of Canada.Ontario is located in the geographic eastern half of Canada, but it has historically and politically been considered to be part of Central Canada. Located in Central Ca ...
, Westminster
Westminster is an area of Central London, part of the wider City of Westminster.
The area, which extends from the River Thames to Oxford Street, has many visitor attractions and historic landmarks, including the Palace of Westminster, Bu ...
, San Marcos
San Marcos is the Spanish name of Saint Mark. It may also refer to:
Towns and cities Argentina
* San Marcos, Salta
Colombia
* San Marcos, Antioquia
* San Marcos, Sucre
Costa Rica
* San Marcos, Costa Rica (aka San Marcos de Tarrazú)
...
, and San Jose); Denver, Colorado
Denver () is a consolidated city and county, the capital, and most populous city of the U.S. state of Colorado. Its population was 715,522 at the 2020 census, a 19.22% increase since 2010. It is the 19th-most populous city in the Unit ...
; Morrow, Georgia
Morrow is a city in Clayton County, Georgia, United States. It is part of the Atlanta metropolitan area. Its population was 6,445 at the 2010 census, up from 4,882 in 2000. It is the home of Clayton State University.
History
The community was nam ...
; Bedford Park, Illinois
Bedford Park is a village in Cook County, Illinois, United States, and is an industrial suburb of Chicago. The population was 602 at the 2020 census. Bedford Park consists of a small residential area and vast amounts of heavy industry sprawling t ...
; ; Las Vegas, Nevada
Las Vegas (; Spanish for "The Meadows"), often known simply as Vegas, is the 25th-most populous city in the United States, the most populous city in the state of Nevada, and the county seat of Clark County. The city anchors the Las Vegas ...
; and Washington (Lynnwood
Lynnwood is a city in Snohomish County, Washington, United States. The city is part of the Seattle metropolitan area and is located north of Seattle and south of Everett, near the junction of Interstate 5 and Interstate 405. It is the four ...
, and Fife
Fife (, ; gd, Fìobha, ; sco, Fife) is a council area, historic county, registration county and lieutenancy area of Scotland. It is situated between the Firth of Tay and the Firth of Forth, with inland boundaries with Perth and Kinross (i ...
). A Business Center in San Marcos, California opened in March 2022.
The first Costco Business Center outside the U.S. opened in Canada in Scarborough, Toronto
Scarborough (; 2021 Canadian census, 2021 Census 629,941) is a district of Toronto, Ontario, Canada. It is situated atop the Scarborough Bluffs in the eastern part of the city. Its borders are Victoria Park Avenue to the west, Steeles Avenue ( ...
in March 2017. In September 2020, the second Canadian Costco Business Centre opened in Saint-Hubert, Quebec
Saint-Hubert ( , , ) is a Boroughs of Longueuil, borough in the city of Longueuil, Quebec, Longueuil, located in the Montérégie, Montérégie region of Quebec, Canada. It had been a separate city prior to January 1, 2002, when it along with sev ...
, near Montreal. A third Canadian Business Centre opened in the Ottawa neighborhood of Gloucester
Gloucester ( ) is a cathedral city and the county town of Gloucestershire in the South West of England. Gloucester lies on the River Severn, between the Cotswolds to the east and the Forest of Dean to the west, east of Monmouth and east ...
in June 2022.
Finances
For the fiscal year 2022, Costco reported earnings of US$5.844billion, with an annual revenue of $226.954billion.
Business model
Costco is a membership-only warehouse which generates a majority of its revenue from retail sales and a small percentage from membership fees. Customers must buy memberships to access the warehouse and make purchases. This is executed through the direct sourcing and efficient inventory management techniques.
Costco divides its business into three segments: United States Operations, Canadian Operations, and Other International Operations. These three business segments are reported by revenue and operating income. Of the three, the United States Operations was the largest, followed by Canadian Operations.
Sales model
The company's rule is that no regular item may be marked up more than 14% over cost, and no Kirkland Signature
Costco Wholesale Corporation (doing business as Costco Wholesale and also known simply as Costco) is an American multinational corporation which operates a chain of membership-only big-box retail stores (warehouse club). As of 2022, Costco i ...
item may be marked up more than 15% over cost. The company runs very lean, with overhead costs at about 10% of revenue and profit margins at 2%. Costco's annual membership fees (US$60/year for Gold Star, US$120/year for Executive ) account for 80% of Costco's gross margin
Gross margin is the difference between revenue and cost of goods sold (COGS), divided by revenue. Gross margin is expressed as a percentage. Generally, it is calculated as the selling price of an item, less the cost of goods sold (e. g. production ...
and 70% of its operating income
In accounting and finance, earnings before interest and taxes (EBIT) is a measure of a firm's profit that includes all incomes and expenses (operating and non-operating) except interest expenses and income tax expenses.
Operating income and op ...
.
If Costco feels the wholesale price
Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In g ...
of any individual product is too high, they will refuse to stock the product. For example, in November 2009, Costco announced that it would stop selling Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...
products, because the soft-drink maker refused to lower its wholesale prices. Costco resumed selling Coca-Cola products the following month.
Although the brand engages in visible efforts to reduce costs, the stores themselves are expensive. In 2013, Costco spent approximately $80million on each of the new stores it opened. The cost is partly driven by the cost of real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
, as each new store means that they need enough space to support a building of approximately in size, a large parking lot, and often a gas station.
Lighting costs are reduced on sunny days, as most Costco locations have several skylight
A skylight (sometimes called a rooflight) is a light-permitting structure or window, usually made of transparent or translucent glass, that forms all or part of the roof space of a building for daylighting and ventilation purposes.
History
Open ...
s. During the day, electronic light meter
A light meter is a device used to measure the amount of light. In photography, a light meter (more correctly an exposure meter) is used to determine the proper exposure for a photograph. The meter will include either a digital or analog calcul ...
s measure how much light is coming in the skylights and turn off an appropriate percentage of the interior lights. During an average sunny day, it is normal for the center section of the warehouse not to have interior lights in use. The company has no public relations
Public relations (PR) is the practice of managing and disseminating information from an individual or an organization (such as a business, government agency, or a nonprofit organization) to the public in order to influence their perception. P ...
department and buys no outside advertising. A typical Costco warehouse carries only 3,700 distinct products, while a typical Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
Supercenter carries approximately 140,000 products.
Like many other retailers vertically integrating their food supply chains, Costco has brought in-house poultry production for their rotisserie chicken
Rotisserie chicken is a chicken dish that is cooked on a rotisserie by using direct heat in which the chicken is placed next to the heat source.
Electric- or gas-powered heating elements may be used by using adjustable infrared heat. These type ...
s, which are a major driver of customer traffic and sales. This is to allow keeping their pricing intact while maintaining a consistent quality control of its chickens as a result of annual growth of per-capita chicken
The chicken (''Gallus gallus domesticus'') is a domesticated junglefowl species, with attributes of wild species such as the grey and the Ceylon junglefowl that are originally from Southeastern Asia. Rooster or cock is a term for an adult m ...
consumption in the United States.
Costco is known for its "exit greeters", who briefly compare receipts against shopping cart contents as customers exit. They are trained to quickly count cart contents and serve as a form of customer service to verify that customers were charged correctly, have redeemed any voucher-based items (e.g., tickets), and have not missed items placed in their cart's lower racks. Costco has used exit greeters since its first store in 1983.
Online shopping
Costco primarily focuses on getting members to come in to a warehouse for purchases, instead of ordering products online. Due to the COVID-19 pandemic
The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identif ...
, Costco's online sales increased dramatically, with more online sales growth in 2020 than the previous 5 years combined.
The company opened its online shopping site at ''Costco.com'' on April 17, 2001. Costco.com is for United States members; costco.ca is for Canadian members, and other countries, such as Mexico, South Korea, Taiwan and the UK, each have their own online Costco shopping website.
Instacart
Instacart is an American company that operates a grocery delivery and pick-up service in the United States and Canada. The company offers its services via a website and mobile app. The service allows customers to order groceries from participatin ...
offers Costco delivery in a select number of states including Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Massachusetts, Maryland, Minnesota, Missouri, North Carolina, New Jersey, New York, Oregon, Tennessee, Texas, Virginia, Washington, and the District of Columbia.
Similarly, in March 2017, Costco initiated a partnership with Shipt
Shipt is an American delivery service owned by Target Corporation. It is headquartered in Birmingham, Alabama.
In December 2017, it was announced that Target Corporation was acquiring Shipt for $550 million and that it would operate as an inde ...
, an online grocery delivery service. Unlike Instacart, Shipt charges its own membership fee, $99 a year or $14 a month, in exchange for free delivery on orders over $35. , Shipt offers Costco delivery in select Florida markets.
In October 2017, Costco launched same-day and two-day grocery delivery options for members.
Products
Costco has a frequently changing inventory and is known for carrying products for a time, then discontinuing them or using them as seasonal products. Over the years, Costco has gradually expanded its range of products and services. Initially, it preferred to sell only boxed products that could be dispensed by simply tearing the stretch wrap off a pallet. It now sells many other products that are more difficult to handle, such as art, books, caskets, clothing, computer software
Software is a set of computer programs and associated documentation and data. This is in contrast to hardware, from which the system is built and which actually performs the work.
At the lowest programming level, executable code consists ...
, fine wine, furniture, home appliances, home electronics, hot tubs, jewelry, perishable items (such as dairy, fresh baked goods, flowers, fresh produce, meat, seafood), solar panel
A solar cell panel, solar electric panel, photo-voltaic (PV) module, PV panel or solar panel is an assembly of photovoltaic solar cells mounted in a (usually rectangular) frame, and a neatly organised collection of PV panels is called a photo ...
s, tires, and vacuum cleaners. Many warehouses also have gas stations
A filling station, also known as a gas station () or petrol station (), is a facility that sells fuel and engine lubricants for motor vehicles. The most common fuels sold in the 2010s were gasoline (or petrol) and diesel fuel.
Gasoline ...
, pharmacies
Pharmacy is the science and practice of discovering, producing, preparing, dispensing, reviewing and monitoring medications, aiming to ensure the safe, effective, and affordable use of medicines. It is a miscellaneous science as it links heal ...
, hearing aid
A hearing aid is a device designed to improve hearing by making sound audible to a person with hearing loss. Hearing aids are classified as medical devices in most countries, and regulated by the respective regulations. Small audio amplifiers su ...
centers, optometrists
Optometry is a specialized health care profession that involves examining the eyes and related structures for defects or abnormalities. Optometrists are health care professionals who typically provide comprehensive primary eye care.
In the Uni ...
, eye and sunglass centers, photo processors, and tire garages.
Some locations have liquor store
A liquor store is a retail shop that predominantly sells prepackaged liquors – typically in bottles – usually intended to be consumed off the store's premises. Depending on region and local idiom, they may also be called an off-licence (i ...
s kept separate from the main warehouse in order to comply with liquor license
A liquor license (or liquor licence in most forms of Commonwealth English) is a governmentally issued permit to sell, manufacture, store, or otherwise use alcoholic beverages.
Canada
In Canada, liquor licences are issued by the legal authority ...
restrictions, while in some states alcohol is sold in the warehouse with the rest of the merchandise. In some states (such as Texas), the liquor store must be owned and operated by a separate company with separate employees. In 2006, Costco lost a lawsuit against the state of Washington in which it was seeking to purchase wine directly from the producer, bypassing the state retail monopoly. In Australia, Costco has to comply with regulations set by each state they choose to trade in; their first store in the Australian state of Victoria
Victoria most commonly refers to:
* Victoria (Australia), a state of the Commonwealth of Australia
* Victoria, British Columbia, provincial capital of British Columbia, Canada
* Victoria (mythology), Roman goddess of Victory
* Victoria, Seychelle ...
benefits from liberal-oriented alcohol licensing laws in that country, with retailers permitted to sell alcohol on shelves within the store in a manner similar to most European countries. In New Zealand, the country's sole warehouse in West Auckland cannot sell alcohol due to The Trusts
The Trusts are a group of two community-owned organisations (licensing trusts) with a near monopoly on the sale of alcohol in West Auckland, New Zealand, West Auckland. They are one of the largest alcohol retailers in New Zealand.
The Portage Lice ...
' monopoly on liquor stores in the area.
Kirkland Signature
"Kirkland Signature" is Costco's private label
A private label, also called a private brand or private-label brand, is a brand owned by a company, offered by that company alongside and competing with brands from other businesses. A private-label brand is almost always offered exclusively by th ...
brand, used for a variety of products sold at Costco's warehouses and website. Costco introduced Kirkland Signature in 1995, deriving the name from the location of Costco's then corporate headquarters, Kirkland, Washington
Kirkland is a city in King County, Washington, United States. A suburb east of Seattle, its population was 92,175 in the 2020 U.S. census which made it the sixth largest city in the county and the twelfth largest in the state.
The city's downto ...
. It accounts for almost a third of all Costco sales and is growing faster than Costco sales.
The idea for the private label was to provide the appearance of brand name quality products at discounted prices. To counteract the consumer confidence problem common in private labels, some of its products are co-branded
Co-branding is a marketing strategy that involves strategic alliance of multiple brand names jointly used on a single product or service.
Co-branding is an arrangement that associates a single product or service with more than one brand name, o ...
with the name brands of their manufacturers, such as Chinet, Jelly Belly
Jelly Belly Candy Company, formerly known as Herman Goelitz Candy Company and Goelitz Confectionery Company, is an American company that manufactures Jelly Belly jelly beans and other candy.
The company is based in Fairfield, California, with ...
, Keurig Green Mountain
Keurig Dr Pepper Inc., formerly Green Mountain Coffee Roasters (1981–2014) and Keurig Green Mountain (2014–2018), is a publicly traded American beverage and coffeemaker conglomerate with headquarters in Burlington, Massachusetts. Formed in ...
, Ocean Spray, Stearns & Foster, and Starbucks
Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It is the world's largest coffeehouse chain.
As of November 2021, the company had 33,833 stores in 80 c ...
. Some Kirkland Signature products still carry white-label brands but are otherwise manufactured by a partner, such as Duracell
Duracell Inc. is an American manufacturer of alkaline batteries, specialty cells, rechargeables and smart power systems, owned by Berkshire Hathaway. The company has its origins in the 1920s, through the work of Samuel Ruben and Philip Mallory, ...
and Niagara Bottling
Niagara Bottling, LLC is a family owned manufacturer of bottled water and soft drinks based in Diamond Bar, California. They produce private label bottled water for a number of companies including Walmart (Great Value), Food Lion, Safeway Inc. (Si ...
.
Publications
''Costco Connection''
''Costco Connection'' is a magazine sent free to the Costco executive members; it can also be accessed online by anyone, free of charge. Until the end of 2018, the magazine was known as ''The Costco Connection''. But with the January/February 2019 issue, "the", the definite article was dropped from the name and now the magazine is known as just ''Costco Connection''.
The magazine was established in 1987 as a newsprint publication and converted to a magazine in 1997. It features articles which regularly tie into the corporation along with business, celebrity features, cooking, entertaining, health, home improvement, and social articles, as well as coupons and ads. MediaPost reports: "While about 90% of the magazine's advertising is co-op, increasingly national advertisers such as Procter & Gamble
The Procter & Gamble Company (P&G) is an American multinational consumer goods corporation headquartered in Cincinnati, Ohio, founded in 1837 by William Procter and James Gamble. It specializes in a wide range of personal health/consumer hea ...
are buying space, notes Roeglin -- presumably because of the pub's gargantuan reach and the data it has on its subscribers (whose average household income is $156,000 a year). 'We see about 56% of our subscribers a month buy something at one of our stores based on something they've read in the magazine,' says Roeglin." The magazine is one of the largest-circulation print monthlies in the United States and presently is the third in circulation figures in the United States after ''AARP The Magazine
''AARP: The Magazine'' is an American bi-monthly magazine, published by AARP, which focuses on aging-related issues.
History and operations
In 1958, AARP began publishing a magazine titled ''Modern Maturity.'' ''Modern Maturity'' was later sp ...
'' and ''AARP Bulletin''.
Other publications
Costco also publishes the ''Costco Household Almanac'', an annual edition started in 2007. The 200+ pages almanac carries a lot of helpful tips to Costco readers and carries ads from suppliers. Costco also publishes a cookbook series.
Services
Concierge service
Costco offers a free "concierge" service to members who purchase electronics, to help answer questions regarding setup and use and avoid potential returns due to not understanding how to use the products.
Costco Auto and Home Insurance
Costco has an agreement with CONNECT, powered by American Family Insurance, for auto insurance
Vehicle insurance (also known as car insurance, motor insurance, or auto insurance) is insurance for automobile, cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage or bod ...
, home insurance
Home insurance, also commonly called homeowner's insurance (often abbreviated in the US real estate industry as HOI), is a type of property insurance that covers a private residence. It is an insurance policy that combines various personal insura ...
and umbrella
An umbrella or parasol is a folding canopy supported by wooden or metal ribs that is usually mounted on a wooden, metal, or plastic pole. It is designed to protect a person against rain or sunlight. The term ''umbrella'' is traditionally used ...
insurance.
Costco photo services
Costco Photo Center is a multi-functional photography printing service offering photo items through its website, costcophotocenter.com. The website provides free unlimited digital file storage with a current membership. Prior to February 14, 2021, in-store photo centers offered many services such as same day photo printing (on select sizes/material) and online order pickup. In-store service/pickup is no longer offered, as all in-store photo centers closed permanently on February 14, 2021.
Costco Optical
Costco Optical ranks as the fifth-largest optical company in the US, . Optometrists
Optometry is a specialized health care profession that involves examining the eyes and related structures for defects or abnormalities. Optometrists are health care professionals who typically provide comprehensive primary eye care.
In the Uni ...
working at Costco locations will see patients without Costco memberships, although a membership is required to fill a prescription at the optical department.
Costco Travel
Costco Travel is a wholly owned subsidiary of Costco Wholesale and offers leisure travel to Costco members of the United States and Canada.
The program offers vacation packages to the Caribbean, Europe, Florida, Hawaii, Las Vegas, Mexico, and the South Pacific.
Food service
In 1985, Costco started to sell freshly prepared food through a hot dog cart
A hot dog cart is a specialized mobile food stand for preparing and selling street food, specifically hot dogs, to passersby. In some jurisdictions, a cart operator must meet stringent health regulations designed to protect the public. Hot dog ...
at its original Seattle warehouse. Most Costco locations now have a food court
A food court (in Asia-Pacific also called food hall or hawker centre) is generally an indoor plaza or common area within a facility that is contiguous with the counters of multiple food vendors and provides a common area for self-serve dinner. I ...
. They can be indoors or outdoors, but the menu is essentially the same: hot dog with drink (one of the most popular items), pizza, frozen yogurt/ice cream, Pepsico beverages, baked items, and sandwiches. Costco offers a quarter-pound 100% beef hot dog
A hot dog (uncommonly spelled hotdog) is a food consisting of a grilled or steamed sausage served in the slit of a partially sliced Hot dog bun, bun. The term hot dog can refer to the sausage itself. The sausage used is a wiener (Vienna sausag ...
and drink (with refills) for , the same price since 1985. Some US locations also offer Polish sausage
Kielbasa (, ; from Polish ) is any type of meat sausage from Poland and a staple of Polish cuisine. In American English the word typically refers to a coarse, U-shaped smoked sausage of any kind of meat, which closely resembles the ''Wiejska'' ...
or bratwurst
Bratwurst () is a type of German sausage made from pork or, less commonly, beef or veal. The name is derived from the Old High German ''Brätwurst'', from ''brät-'', finely chopped meat, and ''Wurst'', sausage, although in modern German it is o ...
in addition to hot dogs, at the same $1.50 price. In Australia and New Zealand, the hot dog is made of pork and is sold with a large soda for $1.99 (AUD
The Australian dollar ( sign: $; code: AUD) is the currency of Australia, including its external territories: Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is officially used as currency by three independent Pacific Isla ...
/NZD
The New Zealand dollar ( mi, tāra o Aotearoa; currency sign, sign: $, NZ$; ISO 4217, code: NZD) is the official currency and legal tender of New Zealand, the Cook Islands, Niue, the Ross Dependency, Tokelau, and a British territory, the Pitcair ...
). In Canada, the price for a hot dog and soda with refills is C$1.50. In Mexico, the hot dog is made of 100% beef and includes a drink (with refills) for MXN$35. In the UK, the hot dog is also made from beef and customers also get a drink (with refills) for £1.50. Costco sold more than 137million quarter-pound (113 g) hot dogs in its food courts in 2017. In Taiwan and Japan, the hot dog is made of pork as well. Japan's price for their 120-gram hot dog & refillable 600-ml drink is ¥180.
As of June 2022, cheese or pepperoni pizza (along with pre-ordering of full pizzas to take home), chicken bakes, ice cream (vanilla), ice cream sundae (vanilla, with very berry or chocolate sauce toppings), fruit smoothie
A smoothie is a beverage made by puréeing ingredients in a blender. A smoothie commonly has a liquid base, such as fruit juice or milk, yogurt, ice cream or cottage cheese. Other ingredients may be added, including fruits, vegetables, non-dai ...
s, latte
Caffè latte (), often shortened to just latte () in English, is a coffee beverage of Italian origin made with espresso and steamed milk. Variants include the chocolate-flavored mocha or replacing the coffee with another beverage base such as ma ...
freeze (without chocolate), mocha freeze (with chocolate), and twisted churro
A churro (, ) is a type of fried dough from Spanish and Portuguese cuisine. They are also found in Latin American cuisine and in other areas that have received immigration from Spanish and Portuguese-speaking countries, especially in the Sou ...
s (in select stores) are offered at all United States locations. Some food court items are only available in certain countries. For example, the bulgogi
''Bulgogi'' (불고기; ; from Korean language, Korean ''bul-gogi'' ), literally "fire meat", is a ''Gui (food), gui'' (구이; Korean-style grilled or roasted dish) made of thin, marination, marinated slices of meat, most commonly beef, gri ...
bake and mango boba tea are only available in Australia, Taiwan, Korea, and Japan; poutine
Poutine () is a dish of french fries and cheese curds topped with a brown gravy. It emerged in Quebec, in the late 1950s in the Centre-du-Québec region, though its exact origins are uncertain and there are several competing claims regarding it ...
is available in Canada and France. There are, however, temporary menu items available exclusively in several countries, like the pastor taco-topped pizza
Pizza (, ) is a dish of Italian origin consisting of a usually round, flat base of leavened wheat-based dough topped with tomatoes, cheese, and often various other ingredients (such as various types of sausage, anchovies, mushrooms, onions ...
s in Mexico.
Due to slow sales, in 2009, the pretzel
A pretzel (), from German pronunciation, standard german: Breze(l) ( and French / Alsatian: ''Bretzel'') is a type of baked bread made from dough that is commonly shaped into a knot. The traditional pretzel shape is a distinctive symmetrical ...
was replaced by the churro. In April 2013, Pepsi
Pepsi is a carbonated soft drink manufactured by PepsiCo. Originally created and developed in 1893 by Caleb Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola in 1898, and then shortened to Pepsi in 1961.
History
Pepsi was ...
replaced all Coca-Cola
Coca-Cola, or Coke, is a carbonated soft drink manufactured by the Coca-Cola Company. Originally marketed as a temperance drink and intended as a patent medicine, it was invented in the late 19th century by John Stith Pemberton in Atlanta ...
fountain drinks at U.S. locations because Coke had raised its prices; this helped keep the hot dog combo with soda at its original price.
In select Costco food courts, Costco was selling cheeseburgers for a limited time to experiment sales. The cheeseburger was not successful, and never spread to more than a few locations.
Costco credit card
On April 1, 2016, in US, Citigroup
Citigroup Inc. or Citi (Style (visual arts), stylized as citi) is an American multinational investment banking, investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking ...
became the exclusive issuer of Costco's branded credit cards. Prior to that, Costco credit cards had been issued by American Express
American Express Company (Amex) is an American multinational corporation specialized in payment card services headquartered at 200 Vesey Street in the Battery Park City neighborhood of Lower Manhattan in New York City. The company was found ...
since 2001, and Costco accepted ''only'' American Express cards for credit transactions. After the switch of its co-branded cards to Citi, Costco ceased accepting AmEx and began exclusively accepting Visa. AmEx cited the reason for the split that Costco was asking for lower transaction fees than AmEx was willing to grant. In Canada, Costco ended its AmEx relationship in 2014, and starting in 2015, it partnered with Capital One
Capital One Financial Corporation is an American bank holding company specializing in credit cards, auto loans, banking, and savings accounts, headquartered in McLean, Virginia with operations primarily in the United States. It is on the list o ...
Mastercard for branded credit cards. In 2020, Capital One announced it would be ending the partnership in late 2021. It was announced that beginning in March 2022, Costco will begin a partnership with CIBC Mastercard. Costco branded credit cards from both issuers also serve as alternate Costco membership cards, with a customized reverse side containing membership info.
Costco Audiobook App
In March 2021, Costco started selling audiobooks and launched a corresponding iOS and Android app to listen to purchases. The app is free, however the books are exclusive to Costco members. The retailer sells audiobooks in bundles grouped by genre or author, with prices ranging from $5 to $50. Audiobooks are currently only available at U.S. locations.
Labor relations
Employee rights
While some former Price Club locations in California and the northeastern United States are staffed by Teamsters
The International Brotherhood of Teamsters (IBT), also known as the Teamsters Union, is a labor union in the United States and Canada. Formed in 1903 by the merger of The Team Drivers International Union and The Teamsters National Union, the u ...
, the majority of Costco locations are not unionized, although there was a drive in 2012 to unionize some locations in Canada. The Teamsters claim that over 15,000 Costco employees are union members. The non-union locations have revisions to their Costco Employee Agreement every three years concurrent with union contract ratifications in locations with collective bargaining agreements. The Employee Agreement sets forth such things as benefits, wages, disciplinary procedures, paid holidays, bonuses, and seniority. The Employee Agreement is subject to change by Costco at any time and offers no absolute protection to the workers. As of June 2022, non-supervisory hourly wages ranged from $17.50 to $28.45 in the U.S., $16.00 to $28.70 in Canada, and £9.75 to £13.90 in the United Kingdom. In the U.S. , eighty-fivepercent of Costco's workers had health insurance
Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among ma ...
, compared with less than fifty percent at Walmart and Target. Health benefits include coverage through Aetna
Aetna Inc. () is an American managed health care company that sells traditional and consumer directed health care insurance and related services, such as medical, pharmaceutical, dental, behavioral health, long-term care, and disability plans, ...
, remote primary care through Teladoc
Teladoc Health, Inc. is a multinational telemedicine and virtual healthcare company headquartered in the United States. Primary services include telehealth, medical opinions, AI and analytics, telehealth devices and licensable platform servic ...
, second opinions and clinical navigation by Grand Rounds
Grand rounds are a methodology of medical education and inpatient care, consisting of presenting the medical problems and treatment of a particular patient to an audience consisting of doctors, pharmacists, residents, and medical students. It wa ...
, varieties of health insurance agencies with Custom Benefit Consultants Inc. (CBC), and wellness coaching by Omada.
In February 2021, Costco announced that it would be raising the starting rate for its hourly store workers in the United States to $16 an hour. Costco has been actively raising their minimum wage starting with $14 during 2018, and into $15 during 2019. They further add that 20% of their hourly employees will be subject to the minimum wage change.
Contractors
Product-demonstration (e.g., food samples) employees work for an independent company. In the western U.S., the company is called Warehouse Demo Services, Kirkland, Washington. Costco also uses Club Demonstration Services (CDS), based in San Diego, California. Demonstration employees receive a pay and benefit package that is less than that of Costco employees. , demonstrations/samples are provided by CDS in Canada.
Public health
Following the COVID-19
Coronavirus disease 2019 (COVID-19) is a contagious disease caused by a virus, the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The first known case was COVID-19 pandemic in Hubei, identified in Wuhan, China, in December ...
outbreak, the first Costco store in Perth, Australia, unexpectedly opened on March 19, 2020, without an opening ceremony and earlier than its planned time of 8:00AM due to high demand, especially for toilet paper products, to ease panic buying in mainstream supermarkets in Australia, although toilet paper was limited to only one per transaction. Carts and other objects were cleaned regularly to minimize the risk of contracting the virus.
Costco contractor CDS temporarily stopped providing free food samples March 6, 2020 at Costco stores globally amid public health concerns regarding COVID-19
Coronavirus disease 2019 (COVID-19) is a contagious disease caused by a virus, the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The first known case was COVID-19 pandemic in Hubei, identified in Wuhan, China, in December ...
.
On December 23, 2020, a Costco store in Cuernavaca
Cuernavaca (; nci-IPA, Cuauhnāhuac, kʷawˈnaːwak "near the woods", ) is the capital and largest city of the state of Morelos in Mexico. The city is located around a 90-minute drive south of Mexico City using the Federal Highway 95D.
The na ...
, Morelos
Morelos (), officially the Free and Sovereign State of Morelos ( es, Estado Libre y Soberano de Morelos), is one of the 32 states which comprise the Federal Entities of Mexico. It is divided into 36 municipalities and its capital city is Cuer ...
, Mexico, was forced to temporarily close after the store ignored restrictions on store capacity.
Discontinued concepts
Costco Home
The first Costco Home warehouse opened in 1983, and was rebuilt / expanded in 2002, in Seattle. The warehouse's concept was to combine the value, setting and members-only elements of Costco's warehouse clubs with the product array one would find at an upscale home store, such as Fortunoff
Fortunoff is a New York-based retailer of outdoor furniture and jewelry.
The company started as a home, jewelry and furniture retailer founded in 1922 by Max and Clara Fortunoff. After being sold to private equity companies in 2005 and 2009, t ...
or Crate & Barrel
Euromarket Designs Inc., doing business as Crate & Barrel (stylized as Crate&Barrel), is an international furniture and home décor retail store headquartered in Northbrook, Illinois. They employ 8200 employees across over 100 stores in the Uni ...
. The Costco Home warehouses sold furniture, housewares, kitchen products and accessories from higher-end brands such as Lexington, Ralph Lauren
Ralph Lauren, ( ; ; born October 14, 1939) is an American fashion designer, philanthropist, and billionaire businessman, best known for the Ralph Lauren Corporation, a global multibillion-dollar enterprise. He has become well known for his co ...
and Waterford
"Waterford remains the untaken city"
, mapsize = 220px
, pushpin_map = Ireland#Europe
, pushpin_map_caption = Location within Ireland##Location within Europe
, pushpin_relief = 1
, coordinates ...
in a warehouse-club setting. Costco claimed that, similar to its main warehouses, it accepted lower margins in return for greater volume with minimal overhead.
On April 2, 2009, the company announced that it would be abandoning its Costco Home concept, closing the two existing stores in Kirkland, Washington
Kirkland is a city in King County, Washington, United States. A suburb east of Seattle, its population was 92,175 in the 2020 U.S. census which made it the sixth largest city in the county and the twelfth largest in the state.
The city's downto ...
and Tempe, Arizona
, settlement_type = City
, named_for = Vale of Tempe
, image_skyline = Tempeskyline3.jpg
, imagesize = 260px
, image_caption = Tempe skyline as se ...
on July 3, 2009, and abandoning plans for a third store on the West Coast. The company cited cutbacks in consumer spending on home products and its interest in focusing on its core business as the main reasons.
Controversies
In 2010, Mercy for Animals
Mercy For Animals (MFA) is an international nonprofit animal protection organization founded in 1999 by Milo Runkle. MFA's mission is to "prevent cruelty to farmed animals and promote compassionate food choices and policies."
MFA has conducted mo ...
conducted an undercover investigation at Buckeye Veal Farm, a veal
Veal is the meat of calves, in contrast to the beef from older cattle. Veal can be produced from a calf of either sex and any breed, however most veal comes from young male calves of dairy breeds which are not used for breeding. Generally, v ...
supplier to Costco. Immediately following the investigative release, Costco adopted a policy against purchasing veal from producers that use the crate-and-chain production method. The case prompted Ohio lawmakers to vote in favor of a veal crate phase-out in the state.
In 2012, Mercy for Animals conducted another undercover investigation of a pork supplier to major retailers such as Costco, Walmart
Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...
, Safeway
Safeway is an American supermarket chain founded by Marion Barton Skaggs in April 1915 in American Falls, Idaho. The chain provides grocery items, food and general merchandise and features a variety of specialty departments, such as bakery, d ...
, Kroger
The Kroger Company, or simply Kroger, is an American retail company that operates (either directly or through its subsidiaries) supermarkets and multi-department stores throughout the United States.
Founded by Bernard Kroger in 1883 in Cincin ...
, and Kmart
Kmart Corporation ( , doing business as Kmart and stylized as kmart) is an American retail company that owns a chain of big box department stores. The company is headquartered in Hoffman Estates, Illinois, United States.
The company was inc ...
. Before the public release of the investigation, Costco announced they would begin requiring their pork suppliers to phase out gestation crates
A gestation crate, also known as a sow stall, is a metal enclosure in which a farmed sow used for breeding may be kept during pregnancy.Wilson G. Pond, Fuller W. Bazer, Bernard E. Rollin (eds.), ''Animal Welfare in Animal Agriculture'', CRC Press ...
.
In 2014, ''The Guardian
''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'' reported that Costco is a client of Charoen Pokphand Foods
Charoen Pokphand Foods Public Company Limited, a company of the Charoen Pokphand Group, is an agro-industrial and food conglomerate headquartered in Thailand. It is the world's largest producer of feed and shrimp, and is also a global top three p ...
. Over six months, ''The Guardian'' traced down a supply chain from slave ships in Asian waters to leading producers and retailers. Costco has published a statement saying it has had a supplier code of conduct since 1999 which does not allow this practice, and that independent auditors check for violations regularly.
In 2015, The Humane Society of the United States
The Humane Society of the United States (HSUS) is an American nonprofit organization that focuses on animal welfare and opposes animal-related cruelties of national scope. It uses strategies that are beyond the abilities of local organizations. ...
conducted an undercover investigation at an egg supplier to Costco. An undercover worker at Hillandale Farms, a major egg supplier to Costco, filmed conditions in which egg-laying hens lived in tiny, wire cages. Following the investigations, several celebrities including Brad Pitt
William Bradley Pitt (born December 18, 1963) is an American actor and film producer. He is the recipient of various accolades, including two Academy Awards, a British Academy Film Award, two Golden Globe Awards, and a Primetime Emmy Award. ...
and Ryan Gosling
Ryan Thomas Gosling (born November 12, 1980) is a Canadian actor. Prominent in independent film, he has also worked in blockbuster films of varying genres, and has accrued a worldwide box office gross of over 1.9 billion USD. He has received ...
publicly wrote to Costco to address this issue. Following efforts by animal protection nonprofits including The Humane League
The Humane League (THL) is an international nonprofit organization that works to end the abuse of animals raised for food through institutional and individual change, including online advertising, Meatless Monday campaigns, and corporate outreac ...
, Costco released an updated commitment to source exclusively cage-free eggs in its operations.
In 2016, a follow up to Costco's shift to cage-free eggs by animal rights group Direct Action Everywhere
Direct Action Everywhere (DxE) is an international grassroots network of animal rights activists founded in 2013 in the San Francisco Bay Area. DxE uses disruptive protests and non-violent direct action tactics, such as open rescue of animals fr ...
(DxE) reported cannibalism and high mortality at a cage-free Costco egg supplier. Costco denied the allegations, but the video sparked a discussion about animal welfare problems continuing to exist at cage-free egg farms. Writing in ''The Huffington Post
''HuffPost'' (formerly ''The Huffington Post'' until 2017 and sometimes abbreviated ''HuffPo'') is an American progressive news website, with localized and international editions. The site offers news, satire, blogs, and original content, and ...
'', DxE co-founder Wayne Hsiung
Wayne Hsiung (born June 18, 1981) is an American attorney and activist. Hsiung is a co-founder of the animal rights network Direct Action Everywhere (DxE). Prior to founding DxE, Wayne was a lawyer with the law firms DLA Piper and Steptoe & Joh ...
argued that the new investigation, rather than suggesting that Costco should keep birds in cages, indicated that hens should have the right not to be raised for food or kept on farms at all.
In January 2017, Costco was brought to court in the US for lax pharmacy controls by violation of the Controlled Substances Act
The Controlled Substances Act (CSA) is the statute establishing federal government of the United States, federal drug policy of the United States, U.S. drug policy under which the manufacture, importation, possession, use, and distribution of ...
. Allegations such as Costco "filling prescriptions that were incomplete", or were for substances "beyond various doctors' scope of practice". The case was settled after Costco paid US$
The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
11.75 million.
In August 2017, a federal judge ordered a "deceptive" Costco to pay Tiffany & Co. $19.4million for misleading consumers into thinking they could buy legitimate Tiffany merchandise at warehouse club prices.
Costco was criticised in 2019 by the Natural Resources Defense Council
The Natural Resources Defense Council (NRDC) is a United States-based 501(c)(3) non-profit international environmental advocacy group, with its headquarters in New York City and offices in Washington D.C., San Francisco, Los Angeles, Chicago, Bo ...
and SumOfUs
SumOfUs is a global non-profit advocacy organization and online community that campaigns to hold corporations accountable on issues such as climate change, workers' rights, discrimination, human rights, animal rights, corruption, and corporate pow ...
for using virgin Canadian boreal forest
Taiga (; rus, тайга́, p=tɐjˈɡa; relates to Mongolic and Turkic languages), generally referred to in North America as a boreal forest or snow forest, is a biome characterized by coniferous forests consisting mostly of pines, spruces, ...
to make its toilet paper. NRDC says that over the previous twenty years, 28 million acres of Canadian boreal forest had been cut down to make toilet paper.
In September 2020, CBS News
CBS News is the news division of the American television and radio service CBS. CBS News television programs include the ''CBS Evening News'', ''CBS Mornings'', news magazine programs '' CBS News Sunday Morning'', '' 60 Minutes'', and '' 48 H ...
reported that Costco has stopped selling Palmetto Cheese after the owner of the pimento cheese brand called Black Lives Matter a "terror organization." Costco posted a note to the item in their Myrtle Beach location indicating that the item will not be reordered, and over 120 Costco's throughout the US will no longer be carrying the item.
In October 2020, Costco dropped Chaokoh coconut milk over the allegations of forced monkey labor. PETA accused the manufacturer, Theppadungporn Coconut Co., of using forced monkey labor, finding cruelty to monkeys at their farms and facilities. Ken Kimble, Costco's Vice President of Corporate Food and Sundries, stated Costco has launched an investigation regarding the issue and have ceased purchasing from the supplier/owner of the brand Chaokoh condemning the use of monkey labor. Kimble also stated that Costco will continue to monitor the implementation of the harvest policies and once satisfied will resume purchasing.
In December 2020, Costco announced plans to end the use of eggs from caged chickens throughout its operations worldwide. It became the first US retailer to issue a global policy on the confinement of animals in its supply chain. Josh Dahmen, Costco financial planning and investor relations director also said that "We are in the process of making that transition to cage-free eggs. We will continue to increase the percentage over time, with a goal of eventually getting to 100%."
See also
* Bulk foods
Bulk foods are food items offered in large quantities, which can be purchased in large, bulk lots or transferred from a bulk container into a smaller container for purchase. Bulk foods may be priced less compared to packaged foods because they ar ...
* Costco bear
The Costco bear is a giant teddy bear manufactured by Hugfun International Inc. and sold primarily at Costco stores.
The teddy bear is 8 foot tall, tan in colour and it costs $290 (Including shipping). It weighs 48.5 pounds, and is intended for ag ...
* ''Costco Wholesale Corp. v. Omega, S. A.
''Omega S.A. v. Costco Wholesale Corp.'', 541 F.3d 982 (9th Cir. 2008), was a case decided by the Ninth Circuit Court of Appeals that held that in copyright law, the first-sale doctrine does not act as a defense to claims of infringing distributi ...
''
* Retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and t ...
* Wholesaling
Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In g ...
* Price Club
Price Club was an American warehouse club, warehouse store chain. It merged with its competitor, Costco, Costco Wholesale, in 1993 and adopted the Costco name in 1997. The original Price Club warehouse is still open, operating as Costco location # ...
References
External links
*
Official UK website
- CNN
{{Authority control, state=expanded
1983 establishments in Washington (state)
Companies based in King County, Washington
Discount stores of the United States
Online retailers of the United States
Organizations based in Issaquah, Washington
American companies established in 1983
Retail companies established in 1983
Supermarkets of the United States