Happy 29th Birthday, Costco!

September 15th, 2012 · 6 Comments

For those of you that weren’t aware, Costco turns 29 today!  So, in honor of Costco’s big day, I thought I’d post a few facts that you might not know about your favorite store.

  1. Costco was founded in Kirkland, Washington by James Sinegal and Jeffrey Brotman.
  2. They opened the first store in Seattle, Washington on September 15, 1983.  (Just thinking about that makes me want to break out my leg warmers.)
  3. 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. The combined company was named PriceCostco (which doesn’t exactly roll off the tongue).  (Dave used to be a Price Club member when he lived in Pasadena, California.)
  4. In 1997, they changed the name to Costco Wholesale.
  5. Costco is currently headquartered in Issaquah, Washington in the US.  Canadian operations are headquartered in Ottawa, Ontario.  The UK operations are headquartered in Watford, just outside of London, and where I currently do my shopping.  And, the Australian headquarters is located in North Ryde, New South Wales.  They also have locations in Japan, South Korea, Mexico, and Taiwan.
  6. As of December 2011, Costco had a total of 598 warehouses in 40 states and Puerto Rico (433 locations), nine Canadian provinces (82 locations), the United Kingdom (22 locations), Korea (seven locations), Taiwan (eight locations, through a 55%-owned subsidiary), Japan (eleven locations), Australia (three locations), and 32 warehouses in Mexico through a 50%-owned joint venture.
  7. Costco is the largest membership warehouse club chain in the world based on sales volume.  They are the third largest general retailer in the United States as of 2010.  As of 2011, Costco is the seventh largest retailer in the world.
  8. The main competitor in the membership warehouse space is Sam’s Club. Sam’s Club may have more warehouses than Costco, but Costco has higher total sales volume.
  9. Since October 2007, Costco has been the largest retailer of fine wine in the world.  In their 2010 fiscal year, Costco sold 84,000 carats of diamonds.
  10. Costco became the first company ever to grow from zero to $3 billion in sales in less than six years.  For fiscal year 2011, which ended on August 28, 2011, Costco’s net sales totaled $87 billion; a 14% increase.  Costco’s net income for 2011 was $1.5 billion which represents a 12% increase.  In 2010, Costco processed more than 1.7 million transactions per day.
  11. Across its more than 598 locations world-wide (end of 2011), Costco employs about 164,000 full- and part-time employees, including seasonal workers.  The average size of a Costco warehouse is 145,000 square feet, with a range from 77,000 to 205,000 square feet.  The largest Costco is located in Hillsboro, Oregon.  The average annualized sales for warehouses opened in 2011 was $103 million per building, with four locations having more than $300 million in annual sales, and one with more than $400 million in sales.
  12. 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. Only 13,600 Costco employees in five states are represented by the International Brotherhood of Teamsters. 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.  In the US, eighty-five percent of Costco’s workers have health insurance, compared with less than half at Walmart and Target.
  13. As of March 20011, non-supervisory hourly wages range from $11.00 to $21.00 in the United States, $11.00 to $22.15 in Canada.  As of September 2012, hourly wages in the United Kingdom range from £6.70 to £10.75.
  14. There are more than 64 million Costco cardholders.  The member renewal rate last year was 89 percent in the U.S. and Canada and 85% worldwide.  Executive Members represent 34% of Costco’s members, but produce a sales penetration of 66%.
  15. Currently membership fees at Costco US are $55.00 per year for Goldstar and Business Memberships or Executive membership for $110.00 per year. Along with the additional benefits the executive membership has, you also receive an annual “2% Rewards Check” of up to $750.00 from Costco on all purchases made (excluding select items such as gasoline, alcohol, and tobacco).  In the UK, membership is £20.00 for Trade membership (plus VAT) which includes a card for a spouse. People who work for the National Health Service, other government employers, or are employed in certain professions or industries are entitled to an individual membership, which costs £25.00.  You can also get an Executive Membership in the UK for £55.00 (plus VAT).  In Australia, membership is AUD$50.00 a year for a business membership, or AUD$60.00 a year for a Goldstar membership.  In Canada, membership is CDN $55.00 a year for a Gold Star membership, or CDN $110.00 a year for an Executive membership.  In Mexico, membership is MXN $450.00 a year for a Gold Star membership, or MXN $1000.00 a year for an Executive membership.
  16. Costco is only open to members and their guests, except for purchases of liquor and gasoline in some U.S. states due to state law; and prescription drugs due to federal law.
  17. Memberships must be purchased in advance for one year.Costco memberships can be refunded in full at any time before they expire.
  18. Purchases made at Costco’s website do not require a membership; however, a 5% surcharge is added to purchases made by non-members.
  19. The ACSI (The American Customer Satisfaction Index) named Costco number one in the retail industry with a score of 81 in 2006 and 2007, a score of 83 in 2008, an 81 in 2009, an 82 in 2010, and a score of 83 in 2011.  (Everyone loves Costco!)
  20. Costco does not carry multiple brands or varieties where the item is essentially the same except when it has a Kirkland Signature product, or a co-branded items, as well as well.  This results in high volume of sales from a single vendor, allowing further reduction in price, and reducing marketing costs.  Costco carries an average of approximately 3,600 products per warehouse, as opposed to 45,000 to 140,000 products at other retailers or supermarkets.
  21. Costco caps its profit margin on most products at 14% or 15%, but generally limits price markup on products from 8%-10%.
  22. 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.  Kirkland Signature products are generally rated highly. Consumer Reports has given high ratings for several products including batteries and laundry detergent. A number one rating was given to Kirkland Signature anodized cookware which sells for significantly less than some comparable products.  The Kirkland Signature products now represent 15% of the items Costco carries, but 20% of their sales dollars.
  23. Costco usually limits marketing to new warehouse openings, occasional mailings to potential new members, and regular mailings to existing members, such as The Costco Connection, coupon mailers, and weekly email blasts from Costco.com. This very targeted marketing approach results in lower marketing expenses when compared to other retailers.
  24. American Express is the only accepted credit card (in the US, UK, Japan, Korea, and Canada) because they charge Costco very low interchange fees (a percentage of revenue from total sales made).  This is an unusual relationship for American Express, which typically charges higher fees to retailers than MasterCard or Visa.  If they don’t have an American Express, customers must pay by cash or debit card.
  25. 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.  (Good for your bank balance, and the environment.)  Also, Costco has placed rooftop solar photovoltaic systems on 60 of their buildings (at the end of 2011), which are projected to generate 55 million kWh of electricity per year.
  26. Costco Optical ranks as the fourth-largest optical company in the US.  And, you can use an FSA (flexible spending account) debit card to pay for your glasses.  According to Consumer Reports: Costco Optical earned the highest score for overall satisfaction among chains, and also beat out most of its competitors for price—a pair of glasses cost a median of $157 compared with a median of $211 at independent optical shops and $212 at eye doctors’ offices.
  27. Most Costco locations have either a food court or a hot dog cart. You can get a hot dog or Polish sausage, as well as pizza in most locations.  You can also get frozen yogurt in chocolate or vanilla, very berry smoothies, mocha latte freeze, chicken bake sandwiches, turkey wraps, chicken Caesar salads, twisted churros, and some locations now offer gelato.  The churros replaced the pretzel because of slow sales.
  28. You can get a quarter-pound kosher hot dog or Polish sausage and 20 ounce drink (with free refill) for $1.50, the same price as when Costco opened in 1983  (and it is actually really tasty and a great lunch treat).  In Australia the hot dog is made of beef and is sold at A$2.49 with large soda.  In Mexico, the hot dog is made of beef, 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.
  29. This is the first Costco birthday that Craig Jelinek will be CEO.  Last year,  Jim Sinegal was still CEO, however, his retirement had been announced at the end of August.  Jim Sinegal will continue to act as a board member, he will also act as an advisor through February 2013.

There you go, twenty-nine facts for twenty-nine years of great service and outstanding values.  How can you not love Costco even more after reading some of these amazing facts and tidbits?

If you’re wondering where I got all of this handy and interesting information, I will admit it all came from Wikipedia and Costco.  I do not have an encyclopedic knowledge of Costco’s history and statistics.  That would just be crazy and weird. :-) And I also am somewhat re-posting this from previous years, with up to date information though.

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6 Responses so far ↓

  1. 1 Gram Norberg // 2012.09.16 at 3:11 pm

    This is from my daughter-in-law who worked at Costco. I sent her the information above and she wrote back to me the following.

    “And I’ll add that that Jim Sinegal worked for Sol Price way back in the 50’s! He started as a bagger at FedMart, which was founded by Sol Price. Sol loved Jim and brought him into Price Club in 1978 but his first warehouse opened in 1976 on Morena Blvd, it’s still there only in a different building. And did you know that Sam Walton named his company Wal-“Mart” because he loved the name Fed”Mart” that Sol Price came up with!!

    Sol Price is considered the founder/inventor of the warehouse stores. I didn’t get to personlly meet him but he was in the warehouses here in San Diego that I worked at quite often. I did get to meet Jim here in San Diego when the Vista warehouse opened. It was the first warehouse to open after the merger and so had both Costco and Price Club employees. It was actually wierd because Sol and Robert Price were there along with Jim. Jim wore jeans and looked like a farmer whereas the Prices never wore jeans in a store.”

  2. 2 Dione // 2012.09.16 at 11:51 am

    Costco hotdogs are the best…sometimes you just need to give in to the craving. Sharing a big fries and gravy on the side with my significant other after spending the afternoon there makes it even better. Yes we love Costco “dates” ha.

  3. 3 Kimberly // 2012.09.16 at 3:13 am

    Fixed the American Express and hot dog stuff. This is why I hate re-using posts, because I always forget to change something. And I really feel silly for missing the American Express in the UK thing, since I shop there and know that they have the signs up all over the check out area now about the new card. Tsk tsk tsk…

  4. 4 Ryan // 2012.09.16 at 2:17 am

    Costco UK now also accept American Express as payment.

  5. 5 sandy edel // 2012.09.15 at 11:58 pm

    Costco was selling Hebrew National Kosher hot dogs — now they grind their own beef – so I don’t think it’s Kosher anymore. Too bad. Hebrew National is the best.

  6. 6 Robin Forgey // 2012.09.15 at 8:48 am

    Hi! Thanks for the cool info. Just a quick correction on the hot dogs. Hot Dogs and polish sausage are all beef in the US, Canada, Mexico, UK and Australia. They are made from pork in Taiwan, Korea and Japan due to import restrictions on beef. All of them taste terrific!

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