Costco Wholesale Corporation (doing business as Costco Wholesale and also known simply as Costco) is an American multinational corporation which operates a chain of membership-only big-box retail stores (warehouse club).[3] As of 2020, Costco was the third largest retailer in the world,[4] and the world’s largest retailer of choice and prime beef, organic foods, rotisserie chicken, and wine as of 2016.[5] In 2021, Costco was ranked #10 on the Fortune 500 rankings of the largest United States corporations by total revenue.[6]
Costco’s worldwide headquarters are in Issaquah, Washington, an eastern suburb of Seattle, although its Kirkland Signature house label bears the name of its former location in Kirkland. The company opened its first warehouse (the chain’s term for its retail outlets) in Seattle in 1983.[7][8] Through mergers, however, Costco’s corporate history dates back to 1976, when its former competitor Price Club was founded in San Diego, California.[9][10][11] As of November 2022, Costco has 842 warehouses worldwide:[12] 579 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 31 in Japan, 29 in the United Kingdom, 18 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China, and one each in Iceland, New Zealand and Sweden.[12]
Costco’s earliest predecessor, Price Club, opened its first store on July 12, 1976, on Morena Boulevard in San Diego, California. It was founded three months earlier by Sol Price and his son, Robert, following a dispute with the new owners of FedMart, Price’s previous membership-only discount store.[13] Price Club was among the first retail warehouse clubs, beginning with its Morena Boulevard store inside a series of old airplane hangars once owned by Howard Hughes.[10][14] The store, known as Costco Warehouse #401, is still in operation today.[15][16]
Price Club’s sales model targeted small business owners, selling items in bulk for a discounted price at no-frills outlets that were accessible only with an annual membership fee.[17] The company launched an initial public offering in 1980 and expanded to 24 locations in the Southwest and 1.1 million members by early 1986.[11][17] Price Club expanded into Canada in 1986, opening a store in Montreal,[18] followed by a Mexico City store in 1992 as part of a joint venture with hypermarket chain Controladora Comercial Mexicana.[19] The company also announced plans to open stores in Spain and Portugal through their Canadian subsidiary.[19]
Costco opens
Jim Sinegal and Jeffrey H. Brotman[20] opened the first Costco warehouse in Seattle on September 15, 1983.[21] Sinegal had started in wholesale distribution by working for Sol Price at FedMart; Brotman, an attorney from an old Seattle retailing family, had also been involved in retail distribution from an early age. During this time, small businesses were given an 8% or 9% discount on inventories.[22] He began his retail involvement as a grocery bagger.[23] A second store opened in Portland in October, and a third in Spokane in December 1983.[7] The company went public in 1985.[21] The company was initially headquartered at its first warehouse in Seattle, but moved its headquarters to Kirkland in 1987.[21]
The “PriceCostco” merger
In 1993, Costco and Price Club agreed to merge operations themselves after Price declined an offer from Walmart to merge Price Club with their warehouse store chain, Sam’s Club.[24] Costco’s business model and size were similar to those of Price Club, which made the merger more natural for both companies.[11] The combined company took the name PriceCostco, and memberships became universal, meaning that a Price Club member could use their membership to shop at Costco and vice versa. PriceCostco boasted 206 locations generating $16 billion in annual sales.[10] PriceCostco was initially led by executives from both companies, but in 1994, the Price brothers left the company to form PriceSmart,[11][25] a warehouse club chain in Central America and the Caribbean unrelated to the current Costco.[26]
In 1996, Costco moved its headquarters from Kirkland to Issaquah.[21]
In 1997, Costco changed its name to Costco Wholesale Corporation, and all remaining Price Club locations were rebranded as Costco.[10][11]
Other company milestones
In 2005, Costco replaced its first Seattle warehouse with a new warehouse on an adjacent lot.[21] The company was able to arrange to keep the same address for the new building.[21]
On April 26, 2012, CNBC premiered its documentary, The Costco Craze: Inside the Warehouse Giant.[27]
In 2014, Costco was the third largest retailer in the United States.[28] That year Costco announced plans to open an online store in China using Alibaba Group.[29]
Costco announced the opening of 29 new locations in 2016, the most in one year since 2007.[30][31] Span Construction, led by King Husein, has constructed almost all of Costco’s buildings since 1989.[32]
Costco opened its first warehouse in China on August 27, 2019, in Shanghai. The store’s opening garnered much attention, which led to its opening day being cut short over safety concerns.[33]
The first Costco in New Zealand was first opened at West Auckland in September 2022,[34][35] delayed from mid-August due to the economic impact of the COVID-19 pandemic.[36]
Costco today
In the United States, Costco’s main competitors operating membership warehouses are Sam’s Club (a subsidiary of Walmart) and BJ’s Wholesale Club.[37] Costco employs 304,000 full and part-time employees worldwide.[1] In 2016, Costco had 86.7 million members.[38] This increased to 90.3 million members in 2017.[39][38] and 94.3 million in 2018.[38] In 2019, Costco had 98.5 million members.[40] In 2020, Costco had 105.5 million members.[41] In 2021, Costco had 111.6 million members.[42] As of 2022, Costco has 118.9 million members.[1]
Costco was the first company to grow from zero to $3 billion in sales in under six years.[10] For the fiscal year ending on August 31, 2012, the company’s sales totaled $97.062 billion, with $1.709 billion net profit.[43] As of 2019, Costco is ranked #14 on the Fortune 500 rankings of the largest United States corporations by total revenue.[44] The ACSI (The American Customer Satisfaction Index) named Costco number one in the specialty retail store industry with a score of 84 in 2014.[45]
From December 2013, Costco’s board of directors was chaired by co-founder Jeffrey H. Brotman and included James Sinegal, co-founder and director, and two officers of the company: president/CEO W. Craig Jelinek and CFO Richard A. Galanti. On August 1, 2017, Jeffrey Brotman died.[46] As of August 2017, James Sinegal and W. Craig Jelinek remained on the board. Jim Sinegal stepped down in 2018.[38]