name	Costco Wholesale Corporation
logo
type	Public company S&P; 500 Component
traded as
industry	Retailing (Warehouse club)
foundation	1983 (Kirkland, Washington)
founder	James D. SinegalJeffrey H. Brotman
location	Issaquah, Washington, U.S.
key people	James Sinegal, Founder & CEOJeffrey Brotman, Founder & ChairmanW. Craig Jelinek, President/COO Richard Galanti, EVP & CFOPaul Moulton, EVP Joseph Portera, EVP Douglas Schutt, EVP Thomas Walker, EVP Dennis Zook, EVP
num employees	147,000 (2009)
locations	584 (2011) United States (422) Canada (81) Mexico (32) United Kingdom (22) Japan (9) Korea (7) Taiwan (6) Puerto Rico (4) Australia (3)
area served	Worldwide
revenue	US$71.422 billion (2009)
operating income	US$1.777 billion (2009)
net income	US$1.086 billion (2009)
products	MerchandisePrivate label brands – Kirkland Signature
homepage	Costco.com }}

Costco Wholesale Corporation () is the largest membership warehouse club chain in the United States. it is the third largest retailer in the United States, where it originated, and the ninth largest in the world. , Costco is the largest retailer of fine wine in the world.

Location

Costco is headquartered in Issaquah, Washington, United States and was founded in Kirkland, Washington with its first warehouse in nearby Seattle. Costco has locations in the United Kingdom, Canada, Australia, Mexico, Taiwan, South Korea, Japan, and the United States.

History

Founded by James (Jim) Sinegal and Jeffrey Brotman, Costco opened its first warehouse in Seattle, Washington, on September 15, 1983. Sinegal had started in wholesale distribution by working for Sol Price at both FedMart and Price Club. Brotman, an attorney from an old Seattle retailing family, had also been involved in retail distribution from an early age. Sol Price died on December 14, 2009 at 93.

In 1993, Costco merged with Price Club (called Club Price in the Canadian province of Quebec). Costco's business model and size were similar to those of Price Club, which was founded by Sol and Robert Price in 1976 in San Diego, California. Thus, the combined company, PriceCostco, was effectively double the size of each of its parents. Just after the merger, PriceCostco had 206 locations generating $16 billion in annual sales. PriceCostco was initially led by executives from both companies, but then Sol and his son Robert Price founded Price Enterprises and left in December 1994.

Prior to the 1993 Price merger, Wal-Mart founder Sam Walton wanted to merge Sam's Club with Price Club.

The first Price Club location was opened in 1976 in an old airplane hangar, previously owned by Howard Hughes, and is still in operation today (Warehouse No.401 located in San Diego).

In 1997, the company changed its name to Costco Wholesale and all Price Club locations were rebranded Costco.

Costco today

In the United States, the main competitors operating membership warehouses are Sam's Club and BJ's Wholesale Club. Although Sam's Club has more warehouses than Costco, Costco has higher total sales volume. Costco employs about 142,000 full and part-time employees, including seasonal workers. Costco had 55 million members.

Costco was the first company to grow from zero to $3 billion in sales in less than six years. For the fiscal year ending on August 31, 2009, the company's sales totaled $71.42 billion, with $1.09 billion net profit. Costco is 25th on the 2010 Fortune 500. The ACSI (The American Customer Satisfaction Index) named Costco number one in the specialty retail store industry with a score of 83 in Q4 2008.

, Costco's board of directors is chaired by co-founder Jeffrey H. Brotman and includes three officers of the company: CEO/co-founder James D. Sinegal, President/COO W. Craig Jelinek, and CFO Richard A. Galanti. There are also eleven independent directors: Hamilton E. James (the "Lead Independent Director"), Benjamin S. Carson, Sr., Susan Decker, Richard D. DiCerchio, Daniel J. Evans, William H. Gates, Sr., Richard M. Libenson, John W. Meisenbach, Charles T. Munger, Jeff Raikes, and Jill Ruckelshaus.

In the United States, Costco is closed on seven holidays: New Year's Day, Easter, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas.

Sales model

Costco focuses on selling products at low prices, often at very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Furthermore, Costco does not carry multiple brands or varieties where the item is essentially the same except when it has a house brand to sell, typically under the Kirkland Signature label. This results in a high volume of sales from a single vendor, allowing further reductions in price, and reducing marketing costs. If Costco management feels the wholesale price of a product is too high, they will refuse to stock the product. For example, on November 16, 2009, Costco announced that it would stop selling Coca-Cola products due to the soft drink maker refusing to lower its wholesale prices. Costco resumed selling Coca-Cola products on December 14, 2009. Costco also saves money by not stocking extra bags or packing materials; to carry out their goods, customers must bring their own bags or use the merchandise shipping boxes from the company's outside vendors.

Lighting costs are reduced on sunny days, as most Costco locations have several skylights. During the day, electronic light meters measure how much light is coming in the skylights and turn off an appropriate percentage of the interior lights. During a typical sunny day, it is very common for the center section of the warehouse to have no interior lights powered on.

Most products are delivered to the warehouse on shipping pallets and these pallets are used to display products for sale on the warehouse floor. This contrasts with retail stores that break down pallets and stock individual products on shelves. Costco limits its price markup on items to 15%.

Membership

Costco is only open to members and their guests, except for purchases of liquor and gasoline in some US states due to state laws; and prescription drugs due to federal law. Memberships must be purchased in advance for one year (as of May 5, 2007). Purchases made at Costco's website do not require a membership; however, a 5% surcharge is added to purchases made by non-members. Purchases made with Costco Cash Cards also do not require a membership, and there is no surcharge. Canadian and United States Costco locations only accept American Express, PIN-based debit cards (Interac in Canada), cash, checks, and now EBT cards (food stamps). While Costco welcomes members to bring up to two guests, only the members may pay for items. American Express is the only accepted credit card (in the United States, Canada, and Japan) because they charge Costco very low interchange fees (a percentage of revenue from total sales made); as Costco's margins are low in comparison to other retailers. Costco accepts Flexible Spending Account (FSA) debit cards for qualifying purchases at the pharmacy and optical departments in the US. Costco.com accepts the American Express, Visa, MasterCard, and Discover cards. The website also accepts Bill Me Later accounts for payment.

membership fees at Costco are $50 per year for a Gold Star (individual) or Business membership, which can be upgraded to Executive membership for an additional $50 per year. Along with the additional benefits the executive membership offers (e.g. car purchasing savings, home loans, car insurance, check printing services) Executive members also receive an annual "2% Rewards Check" of up to $500.00 from Costco on all purchases made, excluding select items such as gasoline, tobacco, and in some states, alcohol.

In Canada, membership is CDN $55.00 a year for a Gold Star membership and includes a card for a spouse, or CDN $100.00 a year for an Executive membership.

In the United Kingdom, membership is £20.00 for Trade membership (plus VAT) which includes a card for a spouse. People who work for the National Health Service or any other government employee are entitled to an individual membership, which costs £25.

In Australia, membership is A$55.00 a year for a business membership, or A$60.00 a year for a Gold Star membership.

In Mexico, membership is MXN $400.00 a year for a Gold Star membership, or MXN $1000.00 a year for an Executive membership. Costco is only open to members for all services and purchases. Mexican locations only accept cash and Visa Electron debit cards; purchases with Mastercard or Visa credit cards have a surcharge of approximately 4%. Purchases with the Mexican Costco credit card keep cash prices.

Policies

Return policy

Costco memberships can be refunded in full at any time before they expire. Costco guarantees almost all of their products with a full refund within a reasonable amount of time. Exceptions include televisions, projectors, computers, cameras, camcorders, digital audio players, and cellular phones; these may be returned within 90 days of purchase for any reason for a refund. After 90 days those returns must be done through the manufacturer according to the terms of the warranty. Costco has negotiated with manufacturers to extend the manufacturers warranty to two years for new TVs and computers. Costco also 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.

Food stamps in the U.S.

Until 2009, Costco did not accept food stamps. As of March 14, 2009, an article in the ''Pittsburgh Post-Gazette'' quoted Jim Sinegal, co-founder and president of the company, as saying, "Generally we don't have customers who use food stamps."

In response to the poor economy, as well as competitor BJ's Wholesale Club's decision in April to accept electronic food-stamp benefits chainwide, Costco announced in May 2009 that it will accept food stamps on a trial basis in two New York City stores starting in June 2009 and depending on its success, might expand it to all New York City stores. The company subsequently announced plans to expand the program beyond New York City, targeting first the "hard-hit areas like Michigan and the central valley of California", expanding to "half its roughly 410 U.S. stores by Thanksgiving", and then going nationwide.

Cash Cards

Costco Cash Cards can be purchased in the warehouse and members can load them with money to make non-cash purchases at all Costco warehouses in the United States and Australia. Because Costco gas stations take only Costco Cash, debit cards, and American Express, people who can only pay for gas by check or cash must purchase a Costco Cash Card inside the building before filling up. A Costco Membership is not required to purchase an in-store item with a Costco Cash Card. A non-member may not purchase or re-load a Costco Cash Card, however, they may spend more than the total value of their cash card provided they do not write a check for the remaining balance.

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 shrinkwrap off a pallet. It now sells many other products that are more difficult to handle, such as fresh produce, meat, dairy, seafood, fresh baked goods, flowers, clothing, books, computer software, vacuums, Home appliances, home electronics, solar panels, jewelry, tires, art, fine wine, hot tubs, furniture and caskets. Many warehouses have tire garages, pharmacies, hearing aid centers, optometrists, photo processors, and gas stations. Optometrists working at Costco locations will see patients without Costco memberships.

Costco Optical ranks as the fourth-largest optical company in the US. A membership is required to fill a prescription at the optical department.

Some locations have liquor stores, often kept separate from the main warehouse in order to comply with liquor license restrictions. 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 trade in; their first store in the state of Victoria benefits from some of the most liberal alcohol licensing laws in the country, with retailers permitted to sell alcohol on shelves within the store, in a manner similar to most European countries, yet they have chosen to have a separate checkout within the liquor section.

Kirkland Signature

''Kirkland Signature'' is Costco's store brand, otherwise known in the retail industry as an "own-brand," "house brand" or "private label." It is found exclusively at Costco's website and Costco warehouses and is trademarked by the company. The name derives from the fact that Costco's corporate headquarters was located in the city of Kirkland, Washington between 1987 and 1996.

Costco introduced Kirkland Signature as its house brand in 1995. The idea was to identify categories in which a private label product could provide brand name quality at discounted prices.

To counteract the consumer confidence problem common in store branding, Kirkland Signature sometimes relies on co-branding. According to Costco, while consumers may be wary of same-store-branding, they are less likely to be wary of brands that they are familiar with and trust.

Services

Costco acts as an investment broker and travel agent. They also have an auto buying program that offers prearranged pricing at specially selected dealerships. Costco members can use the auto program to purchase new and factory-certified pre-owned vehicles, boats, RVs and powersports. According to auto program advertisements, more than a million members have used program in the last five years. Costco has an agreement with Ameriprise for auto and home insurance. In 2004 Costco offered an original artwork by artist Pablo Picasso on their online store; more recently a highly-regarded 1982 Mouton Rothschild wine was offered as well as other rare wines in rotation.

Costco Photo Center is a multi-functional photography printing lab offering services at the warehouses as well as through their web site, costcophotocenter.com. The website provides free unlimited digital file storage with a current membership. Previous to May or June 2010, Costco had an agreement with Mypublisher.com for custom book and calendar publishing. Now, they print the photobooks and calendars themselves.

Online shopping

The domain ''costco.com'' attracted at least 58 million visitors in 2008 according to a Compete.com survey. Costco has three e-commerce websites including costco.com for the US market, costco.ca for Canada and costco.co.uk for the United Kingdom.

Costco Travel

Costco Travel is a wholly owned subsidiary of Costco Wholesale, and offers leisure travel to Costco members of the United States. The program was established in 2000 as a service to Costco members. Costco Travel’s offices are located in Issaquah, Washington, adjacent to Costco’s corporate headquarters. Costco Travel employs 290 travel professionals, all of whom are Costco employees.

The program offers vacation packages to Hawaii, Mexico, the Caribbean, Europe, Orlando, the South Pacific, the Desert Southwest and Las Vegas. Other products include cruises, guided vacations, theme park packages, houseboat rentals, hotel-only lodging and luxury vacation rentals. Select products feature additional benefits for Costco Executive Members.

The program is marketed directly to Costco members through various Costco avenues, including the ''Travel Guide to Savings'' (found in all U.S. Costco warehouses), online in the Travel section of Costco.com, The ''Costco Connection'' magazine, weekly broadcast e-mails, direct mail pieces, multi-vendor coupon booklets, Costco warehouse road shows, and other exclusive Costco projects and events.

Food service

Most Costco locations have a food court, offering a quarter-pound 100% beef hot dog or polish sausage and 20 oz drink (with refill) for $1.50, the same price since 1985. In Australia the hot dog is made of pork and is sold at A$2.49 with large soda. In Mexico, the hot dog is made of pork, and includes a drink (with refill) for $25 MXN. In the UK, the hot dog is also made from beef and you also get a drink (with refill) for £1.50. Costco sold more than 82 million quarter-pound hot dogs in its food courts in 2008. Pizza is also available in most locations as cheese, pepperoni, veggie, or combo, and can be ordered to go at many locations. Frozen yogurt is also served in chocolate, vanilla, or swirled together. Also offered are berry smoothies, mocha latte freezes, chicken bake and their new Asada bake, sandwiches, turkey wraps, twisted churros, chicken Caesar salads, and in some locations, gelato. French fries are also offered in some locations. Due to slow sales, the pretzel was replaced by the churro. The nutrition data for the Costco Food Court items is posted online. In April 2010, certain Costco warehouses in the U.S. and Canada replaced their Coca-Cola drink fountain selections with Pepsi, accompanied with a change in labels on the disposable cups.

Working at Costco

While some former Price Club locations in California and the northeastern United States are staffed by Teamsters, the majority of Costco locations are not unionized. 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. Similar to a union contract, the Employee Agreement sets forth such things as benefits, compensations, wages, disciplinary procedures, paid holidays, bonuses, and seniority. , non-supervisory hourly wages ranged from $11.00 to $21.00 in the United States, $11.00 to $22.15 in Canada, and £6.28 to £10.50 in the United Kingdom. In the US, eighty-five percent of Costco's workers have health insurance, compared with less than fifty percent at Walmart and Target.

Product-demonstration (e.g., food samples) employees work for an outside company. In the western U.S., the company is called Warehouse Demo Services, Kirkland, Washington. Costco also uses Club Demonstration Services, based in San Diego, California. In Canada, demonstrations are done exclusively by Professional Warehouse Demonstrations.

International

Warehouses outside the US are similar to those in the US. Layout, signage, and even parking lot markings are generally identical to warehouses in the US. Food court menus are tailored to international tastes, with poutine on offer in Canada, seafood-topped pizza available in Asian and Mexican locations, clam chowder in Japan, Taiwan & South Korea, jacket potatoes in the UK and meat pies in Australia. The merchandise mix available in warehouses is also tailored to local tastes, with a mix of both American and local products available.

Locations

, Costco has 572 warehouses:

425 in the United States and Puerto Rico

81 in Canada, the most locations per-capita in any country.

32 in Mexico (50–50 joint venture with Comercial Mexicana)

22 in the United Kingdom The latest to open is in Coventry

8 in Japan (Tamasakai is currently closed pending earthquake damage checks)

7 in South Korea The latest to open is in Suyeong-gu, Busan

8 in Taiwan

3 in Australia (Melbourne, Sydney, and Canberra)

In 2005 the world's largest Costco was located in Hillsboro, Oregon, U.S.

Other wholesale formats

Costco has experimented with other formats. Plans for Costco Fresh, a gourmet supermarket, were abandoned in February 2003. The membership-based format was to include a pharmacy, bakery, olive bar, deli, cafe, garden center and photo and optical departments, with products packaged in smaller quantities.

Costco Business Center

Costco Business Centers carry restaurant, hospitality, janitorial, convenience store, and professional office supplies; items are offered in bulk or in smaller quantities, and selection for a given category of product is much broader. Delivery is available. Unlike traditional Costcos, clothing, sporting goods, jewelry, and pharmacy products are among the items not available.

As of September 2010, there are eight Costco Business Centers, located in California (Commerce, Hawthorne, Hayward, and San Diego), Washington (Lynnwood and Fife), Las Vegas, Nevada, and Phoenix, Arizona.

Costco Home

The first Costco Home warehouse debuted in 2002 in Kirkland, Washington. 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 or Crate & Barrel. The Costco Home warehouses sold furniture, housewares, kitchen products and accessories from higher-end brands such as Lexington, Ralph Lauren and Waterford 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.

Over time, the concept was adjusted to include home electronics, some major appliances, office furniture, and a large selection of outdoor furniture and window treatments. Costco also partners with Glentel subsidiary WIRELESS etc. to sell mobile phones and plans.

On April 2, 2009, the company announced that it would be abandoning its Costco Home concept, closing the two existing stores in Kirkland, Washington and Tempe, Arizona 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.

See also

BJ's Wholesale Club

Sams Club

Walmart

References

;General references:

history of the Costco food court from Costco Connection.com

External links

Costco Wholesale official website

Costco Wholesale Australia website

Costco Wholesale Canada website

Costco Wholesale Japan website

Costco Wholesale United Kingdom website

PriceCostco Company History FundingUniverse

Costco Travel official website

Costco Auto Buying Program website

Category:Companies based in Washington (state) Category:Companies established in 1983 Category:Discount stores of the United States Category:Wholesalers of the United Kingdom Category:Online retail companies of the United States Category:Publicly traded companies Category:Retail companies of the United States Category:Supermarkets of Canada Category:Supermarkets of the United States

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