It’s no question that Costco is successful. From the food court to the rotisserie chickens, Costco has been killing it since the late 20th century. Born in September of 1983, the first Costco Wholesale had opened up in Seattle Washington, co-founded by Jim Sinegal and Jeff Brotman. The concept was pioneered by Price Club in 1976 by Sol and Robert Price; warehouses that would sell bulk items to small businesses at a low price with an annual membership fee.
The history of Costco is very layered, with it going through so many different name changes and ownership. Jim Sinegal, the executive vice president of merchandising for Price Club had such success with Price Club, he channeled all of his creative energy into collaborating with Jeff Brotman for Costco Wholesale. Expanding their audience, they decided to sell to the general public instead of just businesses. Over the next decade, Price Club and Costco had merged into one company, named PriceCostco, then renamed to Costco.
Success behind the Price Club business model has shaped Costco to be how it is today. One of the innovations that led to Costco becoming so successful is the membership model. Nowadays, they’ve implemented a policy where executive members can enter at 9am instead of 10am for gold star and business members. Since they expanded their audience from small businesses to the general public, people could buy quality bulk goods at a low price. The model fostered customer loyalty and drove up revenue for the warehouse.
The GH Falcon talked to 7 year member Shelby Kanoy about her executive Costco membership, “Costco is amazing, we always get a slice of pizza and a drink for only two dollars.” Costco’s food court is also one of the things that attracts people to go to Costco, there’s a variety of food to get there like their iconic 1.50 hotdog and drink, chicken bake, and double chunk chocolate cookie.
Costco is very versatile in their services as well with their optical care and pharmacy offering a wide selection of glasses as well as access to pharmaceutical care. The GH Falcon also asked 15 year member Wendy Ruan about Costco’s services, “I love how I can go to Costco, get some food, buy some necessities, and also get new glasses while I’m at it.”
In the early years, Costco’s business model had proven to be very effective through its financial stability and growth. Through the use of their business model, the warehouse has had sales up to one billion dollars within five years of their opening.
The proof is in the pudding, Costco has expanded to multiple different countries with locations everywhere in the U.S. as well. Their journey to the top has been one for the books with opening up their first location in 1983 to having 914 locations all around the world.
The rise of Costco is a story of both strategic growth and a clever business model centered on high quality products sold for a low price. In recent years, Costco has launched and introduced its own private brand, Kirkland Signature which sells a variety of products at a lower price point than national brands. Overall, Costco is a business that’s built around efficiency and selling goods that are cost effective.
