Costco facts for kids
Logo since 1997
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Headquarters in Issaquah, Washington
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| Public | |
| Traded as | |
| Industry | Retail |
| Founded | September 15, 1983 (as Costco) Seattle, Washington, U.S. |
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| Headquarters |
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US
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Number of locations
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876 (2024) |
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Area served
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Key people
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| Brands | Kirkland Signature |
| Services |
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| Revenue |  US$242.3 billion (2023) |
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Operating income
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US$8.114 billion (2023) |
| US$6.292 billion (2023) |
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| Total assets | US$68.99 billion (2023) |
| Total equity | US$25.06 billion (2023) |
| Members | 132.0 million (2024) |
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Number of employees
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316,000 (2023) |
Costco Wholesale Corporation, often just called Costco, is a huge American company. It runs a chain of stores where you need a special membership to shop. These stores are like giant warehouses, selling many different products in bulk.
As of 2021, Costco was the third-largest retailer in the world. It's also the biggest seller of certain foods globally, like prime beef, organic foods, and rotisserie chickens. Costco is known for its low prices and its own brand, Kirkland Signature.
Costco's main office is in Issaquah, Washington, near Seattle. The company opened its first warehouse in Seattle in 1983. However, its history actually goes back to 1976. That's when a company called Price Club, which later merged with Costco, was started. Today, Costco has 876 warehouses all over the world.
Contents
Costco's Story: How It Grew
The Start of Price Club
Costco's story begins with a company called Price Club. It opened its first store in San Diego, California, in 1976. This store was founded by Sol Price and his son, Robert. Price Club was one of the first "warehouse clubs." It sold items in large quantities at lower prices.
To shop there, you had to pay an annual membership fee. Price Club mostly sold to small businesses. By 1986, it had grown to 24 locations and over a million members. It even expanded into Canada and Mexico.
Costco Opens Its Doors
Jim Sinegal and Jeffrey H. Brotman opened the very first Costco warehouse. This happened in Seattle on September 15, 1983. Jim Sinegal had learned about wholesale from Sol Price himself. Jeffrey Brotman came from a family involved in retail.
Soon after, more Costco stores opened in Portland and Spokane. By 1985, Costco had 17 warehouses across the country. It also had nearly 2,000 employees. The company's main office moved to Kirkland, Washington, in 1987.
The Big Merger: PriceCostco
In 1993, Costco and Price Club decided to join forces. They became one big company called PriceCostco. This merger made sense because both companies had similar business ideas. After the merger, members could shop at either Price Club or Costco stores.
Together, PriceCostco had 206 locations. They made $16 billion in sales each year. In 1994, the Price family left the company. They started a new warehouse club chain called PriceSmart. In 1997, the company officially changed its name back to Costco. All Price Club stores were then rebranded as Costco.
Recent Milestones for Costco
Costco continues to grow and change. In 2005, the original Seattle warehouse was replaced. A new, larger building was built next door. In 2014, Costco was the third-largest retailer in the U.S. That year, it also planned to open an online store in China. This was done through a partnership with Alibaba Group.
In 2019, Costco opened its first warehouse in Shanghai, China. The opening was so popular that it had to close early due to crowds. The first Costco in New Zealand opened in September 2022. Today, Costco has many members worldwide. In 2023, it had over 129 million members. Its main competitors are Sam's Club and BJ's Wholesale Club.
Where Can You Find Costco Stores?
As of April 2024, Costco has 876 warehouses around the world:
- 600 in the United States
- 108 in Canada
- 40 in Mexico
- 4 in Puerto Rico
- 33 in Japan
- 29 in the United Kingdom
- 18 in South Korea
- 15 in Australia
- 14 in Taiwan
- 6 in China
- 4 in Spain
- 2 in France
- 1 in Iceland
- 1 in New Zealand
- 1 in Sweden
Costco Around the World
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Costco stores outside the U.S. look very similar to those in America. They have the same layout and signs. However, their food courts often offer local favorites. For example, you can find meat pies in Australia. In Canada and France, they serve poutine. Asian locations might have seafood pizza.
Biggest and Smallest Costco Stores
The largest Costco store in the world is in Salt Lake City, Utah. It covers a massive 235,000 square feet. Costco is even planning a new store in Fresno, California, that will be even bigger. In Canada, the largest store is in St. John's, Newfoundland.
In 2018, the Costco store in Taichung, Taiwan, had the most members. It was also second in sales worldwide. The smallest Costco store is located in Juneau, Alaska.
What are Costco Business Centers?
Costco Business Centers are special warehouses. They are open to all Costco members. These centers mainly sell products for businesses. They focus on items that small businesses need.
Business Centers do not sell clothes, jewelry, or tires. Instead, they offer larger quantities of business products. More than 70% of their items are not found in regular Costco stores. Some Business Centers have a food court or a gas station. They also have a Print & Copy Center for professional printing. These centers can deliver goods in bulk.
The first Business Center opened in Lynnwood, Washington, in 1996. As of August 2022, there are 22 Business Centers in the United States. Canada also has three Business Centers.
How Costco Makes Money
Costco makes most of its money from membership fees. A smaller part comes from selling products. Customers must buy a membership to shop in the warehouses. This model helps Costco keep its prices low.
Costco has a rule about how much it can mark up items. Regular items can't be marked up more than 14% over cost. Kirkland Signature items can't be marked up more than 15%. This helps keep prices low for members. The annual membership fees are a big part of Costco's profit.
If Costco thinks a product's price is too high, they won't sell it. For example, in 2009, Costco stopped selling Coca-Cola products. This was because Coca-Cola wouldn't lower its wholesale prices. They started selling Coca-Cola again the next month.
Building new Costco stores is expensive. Each new store costs about $80 million. This is partly because they need a lot of land. They need space for a huge building, a large parking lot, and often a gas station.
Costco saves money in other ways. Many stores have skylights. On sunny days, sensors turn off inside lights. This saves a lot of electricity. Costco also doesn't have a public relations department. They don't buy outside advertising either. A typical Costco store sells about 3,700 different products. This is much less than a Walmart Supercenter, which sells around 140,000.
Rotisserie chickens are very popular at Costco. They bring many customers into the stores. Costco even opened a factory in Nebraska in 2019. This helps them keep chicken prices low and quality high. Some international Costco stores also make sushi in-house.
Costco is known for its "exit greeters." These employees check receipts as customers leave. They make sure customers were charged correctly. They also check if any items were missed. Costco has had exit greeters since its first store opened in 1983.
Shopping Online at Costco
Costco mainly wants members to shop in its warehouses. However, online sales have grown a lot. During the COVID-19 pandemic, online sales increased dramatically.
Costco launched its online shopping site in 1998. It expanded to include business-to-business sales in 2001. You can also get Costco delivery through services like Instacart and Shipt in some areas. In October 2017, Costco started offering same-day and two-day grocery delivery.
What Can You Buy at Costco?
Costco often changes its inventory. Some items are only available for a short time or seasonally. Over the years, Costco has added many different products. They started with bulk, boxed items. Now, they sell all kinds of things.
You can find art, books, clothing, and computer software. They also sell fine wine, furniture, and home appliances. Electronics, hot tubs, and jewelry are also available. Plus, they have fresh foods like dairy, baked goods, and meat. Other items include solar panels, tires, and vacuum cleaners.
Many Costco warehouses also offer extra services. These include gas stations, pharmacies, and hearing aid centers. They also have eye doctors and eyewear departments. Some stores even have tire installation garages.
Selling Gold Bars
In October 2023, Costco started selling one-ounce, 24-karat gold bars. These are usually sold for a little more than the market price of gold. However, Executive members can get cash back. This makes gold bars a low-profit item for Costco. They are seen as a way to encourage more people to become members.
Kirkland Signature: Costco's Own Brand
Kirkland Signature is Costco's own brand. It's found on many products in stores and online. The brand started in 1995. It's named after Kirkland, Washington, where Costco's main office used to be. Kirkland Signature products make up almost one-third of Costco's total sales.
The goal of Kirkland Signature is to offer products that are as good as famous brands. But they are sold at lower prices. Costco sometimes partners with well-known companies for its Kirkland Signature items. For example, they have co-branded products with Starbucks and Ocean Spray. Other Kirkland Signature products are made by companies like Duracell. The brand often uses simple packaging. This shows its focus on good quality at affordable prices.
Extra Services at Costco
Concierge Service
Costco offers a free "concierge" service. This helps members who buy electronics. They can get help with setting up and using their new items. This service helps prevent returns if customers don't understand how to use a product.
Costco Auto and Home Insurance
Costco has a deal with CONNECT, powered by American Family Insurance. This allows members to get car insurance, home insurance, and umbrella insurance.
Costco Optical
Costco Optical is one of the biggest optical companies in the U.S. You don't need a Costco membership to see an eye doctor at Costco. But you do need one to buy glasses or contacts from their optical department.
Costco Travel
Costco Travel is a company owned by Costco. It offers vacation packages to Costco members in the U.S. and Canada. They offer trips to places like the Caribbean, Europe, Hawaii, and Mexico.
Costco Food Court
In 1985, Costco started selling food from a hot dog cart. This was at its first store in Seattle. Now, most Costco stores have a food court. They can be inside or outside. The menu is usually the same. It includes a hot dog with a drink, pizza, and frozen yogurt.
Costco is famous for its quarter-pound hot dog and drink combo. It costs only $1.50, and it has been that price since 1985! In other countries, the hot dog might be made of pork or beef. The price is also very low. In 2017, Costco sold over 137 million hot dogs in its food courts.
Other popular items include chicken bakes and ice cream sundaes. Some food court items are only available in certain countries. For example, you can find bulgogi bake in Asia. Poutine is available in Canada and France.
In 2013, Pepsi replaced Coca-Cola drinks at U.S. locations. This helped Costco keep the hot dog combo at its original $1.50 price. Diced onions for hot dogs were removed in 2020 but returned in 2023.
Costco Credit Card
Since April 2016, Citigroup has issued Costco's credit cards in the U.S. Before that, American Express issued them. Costco now only accepts Visa credit cards. In Canada, Costco partners with CIBC Mastercard for its credit cards. These credit cards also work as Costco membership cards.
Costco Audiobook App
In March 2021, Costco started selling audiobooks. They also launched an app for members to listen to them. The app is free, but only members can buy the audiobooks. Costco sells audiobooks in bundles. They are grouped by genre or author. Prices range from $5 to $50. Audiobooks are currently only available in U.S. stores.
Working at Costco
Employee Rights
Most Costco locations are not part of a union. However, some former Price Club stores are unionized. Costco has an "Employee Agreement" for its non-union workers. This agreement covers things like pay, benefits, and holidays.
Costco is known for offering good benefits to its employees. In 2005, 85% of Costco's workers had health insurance. This was much higher than at Walmart or Target. In February 2021, Costco raised its starting pay for hourly workers to $16 an hour. They have been raising their minimum wage since 2018.
Contractors
Costco works with two companies for product demonstrations. These are Club Demonstration Services (CDS) and Warehouse Demo Services (WDS). These companies provide employees who give out food samples. Their pay and benefits are different from Costco's own employees.
During the COVID-19 pandemic in 2020, product demonstrations stopped. Some CDS employees helped with cleaning tasks. Then, they were temporarily laid off. They were rehired when demonstrations started again in June 2020.
Past Costco Ideas
Costco Home Stores
The first Costco Home store opened in Kirkland, Washington, in 2002. These stores aimed to combine Costco's value with upscale home items. They sold furniture, kitchen products, and accessories from high-end brands. A second store opened in Arizona in 2004. However, Costco decided to close both Costco Home stores in 2009. They also stopped plans for a third store.
Costco Fresh Stores
Costco also planned a grocery-focused store called Costco Fresh. This idea was first announced in 1999 for a location in New York City. The store would focus on fresh produce, meats, and baked goods. It would also have some features from regular Costco stores. However, the company dropped the idea later that year due to costs. The concept was briefly brought back in 2002 for a store in Bellevue, Washington. But it was dropped again the following year.
See also
- Bulk foods
- Costco bear
- Price Club
- Retail
- Wholesaling
