Britannica Money (2024)

Costco Wholesale Corporation, one of the largest retailers in the world, operates membership warehouses in which bulk quantities of merchandise are sold at discounted prices to club members who pay an annual membership fee. The company is based in Issaquah, Washington.

Founding and growth

Costco traces its history back to 1976, when Sol Price, a pioneer in warehouse club retailing, opened the first Price Club in San Diego. It was limited at first to business members, until James D. Sinegal as executive vice president of merchandising, distribution, and marketing) helped Price Club expand to allow non–business members.

• In 1983, Sinegal joined with Jeffrey H. Brotman to open the first Costco Wholesale in Seattle.
• In 1993 the Price Company (corporate parent of Price Club) and Costco merged to become PriceCostco.
• In 1997 the corporate name was changed to Costco Companies, Inc.
• In 1999 the present corporate name–Costco Wholesale Corporation—was adopted.
• By the early 21st century the company operated stores in the United States, Canada, Mexico, Europe, Asia, and Australia.
• As of 2024 there are 877 locations; 605 of those are in the U.S. and Puerto Rico.

Warehouse goods

A Costco store typically carries supermarket items and an ever-changing selection of other merchandise, including some luxury goods. The stock is stacked high in a cavernous “warehouse” enclosing more than an average of 140,000 square feet (13,000 square meters) of floor space. Despite the large area, a Costco store typically stocks only about 4,000 different items at any given time—about one-tenth of the variety that is available at the average supermarket.

According to Craig Jelinek, the company’s CEO and director, “Costco is able to offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing, and accounts receivable. We run a tight operation with extremely low overhead which enables us to pass dramatic savings to our members.”

Kirkland Signature products

Begun in 1995, private label Kirkland Signature products are designed to be of equal or better quality than national brands. Unlike previous companies which changed their private label name depending on the type of product, Costco assigned “Kirkland Signature” to its private products across the board. Kirkland Signature products include:

• Clothing
• Grocery
• Health and beauty
• Household and cleaning
• Organic
• Home and kitchen
• Diapers and baby
• Pet food and supplies

Warehouse membership

As of 2024, Costco Wholesale has 132 million cardholders among 73.4 million household members. Memberships for personal or business use cost $60 as of 2024. A $120 membership adds a 2% annual reward certificate (up to $1,000 per year) and discounts on Costco services. Membership cards are checked at the entrance and at checkout.

Other member benefits

Most Costco Wholesale warehouses have a discounted gas station on site for members. Costco Wholesale also provides other discounted benefits to its members:

• Travel—Discounted rates on hotels, cruises, rental cars and other travel products.
• Tire center—Discounted name-brand tires (cheaper brands are not represented).
• Pharmacy—Discounted brand-name and generic prescription drugs.
• Optical—Discounted glasses and contacts, as well as the ability to see an optometrist.
• Food court—Discounted fast food, such as the $1.50 hot dog, which brings in customers even if Costco takes a loss on each hot dog sold.

Retail controversies

Costco has often been praised for providing its employees with higher pay and better benefits than were customary in the field of retailing, but there is room for improvement. When Costco’s Norfolk, VA workers voted to unionize, the company’s response was that they need to improve employee satisfaction.

Costco has also been praised for its sustainability initiatives, including the low-budget warehouse model and letting customers use shipping boxes to carry out their purchases rather than giving out bags. However, critics suggest that product packaging is wasteful and harmful to the environment.

Because you must pay a membership fee to shop at Costco, some people might think that the pricing model is elitist. If you are not a Costco member, you can still purchase items online at Costco.com by paying a 5% surcharge (although some items are designated “member only”).

As online purchasing has become more prevalent in the retail landscape, especially since COVID-19, it remains to be seen if the in-store shopping experience provided by Costco Wholesale Corporation will continue to bring in consumers. If the typical weekend parking lot is any indication, Costco members seem to like the discounted prices, the feeling of belonging to a “club,” the ability to make bulk purchases without paying shipping costs, free food samples, and cheap hot dogs.