costco-intro.html

Costco-Introduction

The first Price Club opened in San Diego in 1976 and the first Costco opened in Seattle in1983. They merged in October of 1993 forming PriceCostco Inc. (hereafter referred to as simply Costco) which now has 266 locations in 21 states, eight Canadian provinces, six Mexican states, and three sites in Great Britain. The company also operates a Price Club warehouse in Korea and one in Saipan, through licensing agreements with retailers in those countries and it has announced plans to open branches in Liverpool and Manchester, England and Taiwan.

Costco's 70,000 to 160,000 square foot warehouses are an astonishing success. In 1983 Costco had a total revenue of $1 million; in the 1995 fiscal year it made $17.906 billion in total revenue. In the Portland metropolitan area alone where there are four Costco warehouses, an estimated 133,000 people visit Costco every week spending about $530 million every year. Globally, Costco now has 52,700 full- and part-time employees and 25 million card holding members.

Costco's goal is simple. They describe themselves as a "Membership warehouse club selling top-quality hardlines, softlines, food and other goods, often in bulk quantities, to businesses and individuals at very low prices." Another term for this type of retail store is "Power-Box" which refers to the enormous discount stores that thrive on the principle of minimizing overhead costs. This could accurately be called the "less-is-more" concept where sales help, nice buildings, nice displays, and all other frills are all eliminated in order to get the lowest possible price.

Costco is still expanding, not only in numbers of retail warehouses, but also into the production itself. PriceCostco Industries, a division of the company, operates manufacturing businesses including candy and nut packaging facilities, optical-lens laboratories, photo processing, and meat processing all with the common goal of minimizing the retail cost.

Costco and the power-box concept is a huge success. It's revenue has been growing steadily since it's incorporation and it shows absolutely no signs of slowing down. Costco President Jim Sinegal said that "the company's growth has been stimulated by the overwhelming acceptance of the warehouse club merchandising concept which PriceCostco pioneered." Overwhelming is the appropriate word as power-boxes continue to control more and more of the market. But before we blindly praise the low prices, do we really understand what this new retail concept will mean?

Other Costco Links in this site:

Packaging: The Presentation of Commodities

Packaging: Legitimizing Its Consumption

Consumption Extravaganza

Aggressive Tactics, Diversion, and the Effect

Elimination of Smart Consumption

The Costco Community

What's Next? The Future of Costco