Costco’s Success Story by the Numbers
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You know Costco as the place to go when you need a giant bag of onions, an eight-piece sectional sofa and four new tires, but you only have time to make one stop. The everything store emerged from the pandemic as one of the retail industry’s biggest winners as Costco’s business model continues to adapt and endure.
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One of the country’s most respected retailers, Costco has a reputation for loyal members, happy workers and fat-pocketed investors. Here’s a look at the numbers behind Costco’s four-decade success story.
It All Started With #401
Costco’s corporate history dates to 1976, when its predecessor, Price Club, opened its first location on Morena Boulevard in San Diego in a converted airplane hangar once owned by Howard Hughes. Still in operation today, the location is known as Costco Warehouse #401.
Founded by retail entrepreneur Sol Price, the store’s business model changed the industry forever. Price Club sold bulk items at bare-bones outlets to small-business owners who were willing to buy wholesale products and supplies at a discount. The prices were so low that customers didn’t mind that the locations looked more like warehouses than stores and that they had to pay a membership fee to access them.
With that, the warehouse membership club concept was born.
As the wildly successful Price Club franchise expanded and grew, a founding company executive named Jim Sinegal broke away from Sol Price and used his expertise, connections and cash to open the first Costco in Seattle in 1983.
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From Zero to $16 Billion in 10 Years
In 1985, the same year that Costco debuted its first hot dog cart — a frank and a soda cost $1.50 — the company went public. According to Seattle Business, Costco topped $1 billion in sales just two years later.
Shortly thereafter, it became the first company in history to reach $3 billion in sales in just six years.
On its 10th anniversary in 1993, the company merged with the industry OG and longtime Costco competitor Price Club, under the name PriceCostco. The result was a membership warehouse club juggernaut doing about $16 billion in annual sales.
In 1997, the company reverted back to the Costco name.
From 1 Warehouse in California to 830 Warehouses in 12 Countries
Within a year of the original Costco’s debut in 1983, the company had two more locations, according to Seattle Business, one in Spokane, Washington, and another in Portland, Oregon. In 1993, with the Price Club merger, Costco was operating 206 locations just 10 years after its founding.
As of August 2022, Costco operates 838 locations in a dozen countries. There are 578 Costco warehouses in 46 U.S. states and Puerto Rico and 107 in nine Canadian provinces. Mexico has 40 locations, Japan has 31 and the U.K. has 29. Australia is home to 13 warehouses, Korea has 17, Taiwan has 14, and the rest are scattered across Spain, Iceland, France and China.
Like everything else about Costco, its locations are big — really big. The average warehouse is 146,000 square feet, with some reaching 230,000 square feet.
Today, Costco’s Corporate Numbers Are as Big as Its Warehouses
In 2022, Costco is the No. 3 largest retailer in America behind only Walmart and Amazon, according to the National Retail Federation. It’s the fifth-largest retailer in the world, Fortune reported.
Costo currently ranks No. 11 on the Fortune 500 list, which ranks American corporations by revenue — Costco’s annual revenue is $192 billion.
Cost-Consciousness as a Top-Down Philosophy
Jim Sinegal retired in 2018 after 35 years with the company he co-founded as one of the most successful and respected CEOs in corporate history. Along the way, he developed a reputation for running a relentlessly frugal company — and holding himself to the same standard — for the benefit of his customers and employees.
Famous for its zero-dollar advertising budget, Costco reinvests the money it doesn’t spend on marketing and uses it to cut prices and boost wages. It’s part of the same strategy, according to The New York Times, that gave rise to its famously spartan locations and stingy inventory — Costco is proud to have just 4,000 stock-keeping units (SKUs) compared to the supermarket industry standard of 30,000.
According to the Times, Sinegal forbade Costco from marking up the price of inventory above 15% over cost, even if he knew customers were willing to pay more — and he, himself, walked the walk.
During his time at Costco, Sinegal’s salary topped out at $350,000, according to The Washington Post. That’s about one-third of the $1 million that the average Fortune 100 CEO pulls in, and he worked out of a tiny office furnished with folding chairs, answering his own phone without the aid of a secretary, for his entire career.
40 Years of Happy Customers, Workers and Investors
Costco claims 116.6 million cardholders, and its members are famous for their fierce loyalty to the brand. According to Fortune, Costco enjoyed a 91% membership renewal rate in 2021. That’s despite both the pandemic and the fact that Costco raised prices in the face of the highest inflation in four decades.
Consistently heralded as a worker-centric company, Costco now employs 298,000 people, 195,000 of whom work in the U.S. — and not one of them earns less than $17 an hour. But members and employees aren’t the only ones who sing the company’s praises. Costco’s shareholders earned 52% in 2021, but investors have been smiling thanks to the company for decades.
When Costco went public on Dec. 5, 1985, shares cost $10, but adjusting for stock splits, the initial price per share would be approximately $1.67. Today, the company’s shares trade at around $550.
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Jami Farkas contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: Costco’s Success Story by the Numbers
