Costco at 40

By Morf Morford, Tacoma Daily Index

It is difficult for many of us to believe, but there was a time before Costco. Some of us remember those barbaric times of going to a grocery store a couple times a week and buying food or basic household items that would last us a few days, or a week at most. Costco, in fact, had its 40th anniversary on September 15th, 2023.

And then there was Costco

When the local Costco opened, it was something approaching a revelation. Instead of buying a 4-pack of toilet paper, for example, we could buy a 24 or 30 pack at a price (per roll) vastly cheaper than the neighborhood grocery store.

You might not “need” a month’s worth of cat food or milk, but then again, you might.

Costco took some getting used to; wholesale prices were great, but those wholesale packages, bins and cases were not for every budget – or vehicle. Ever take a close look at a Costco parking lot and the sizes of vans, SUVs and trucks you see there? In America, we might love big cars and trucks, but for the steadfast Costco shopper, a large vehicle is essential.

Are you a member?

Many of us are. Costco has about 120 million members (that’s about 69 million households) worldwide and is the third-largest retailer in the world, behind Walmart and Amazon.

Anyone can shop at any store, but to shop at Costco, you need to be a member. In the early days, a potential shopper had to show proof of steady employment to apply to be a member.

As you might guess, because of its membership only policy, Costco has a far lower rate of inventory loss, also known as shrinkage (aka shoplifting) than most other stores – more than 90% less than the retail industry loss average. Part of that is the near-elimination of bad checks, credit card fraud and, of course, those counters and receipt-checkers at every entrance and exit.

About 90% of us renew (and pay for) our membership every year.

Who shops at Costco?

About 37% of Americans shop at Costco, with the average customer spending almost $150 on each shopping trip and walking out with an average of nine items.

The Costco model depends on a solid, reliable upper middle class customer base. Their typical customer is married, college-educated, with an income over $125,000 annually.

The stores tend to be located in prosperous suburbs – usually within sight of, or a short drive from, a local freeway.

Sales at Costco?

Costco does have certain items on sale – or at least discounted. But you won’t see ads in print or in the media. Members get a monthly brochure of the sales for the following month.

Costco keeps it’s prices low by keeping their overhead low; the typical Costco carries less than 4,000 stock-keeping units at each store, far less than Walmart’s average of about 140,000.

The whole idea of Costco is bulk – if they can’t sell a lot of something, they probably won’t carry it at all.

Life before Costco

Costco was not the first “bulk” warehouse type store. In the Puget Sound area, there was a Seattle-based “warehouse” chain that opened in the 1960s with the name “Prairie Market”. Membership was not required, but customers had to bag their own groceries and had to mark prices on the packages with a grease pencil. They were usually in abandoned storefronts in low-budget, off-thoroughfare neighborhoods.

Sam’s Club, besides Amazon, is Costco’s primary competition, but Costco clearly holds a more solid place on the world’s shopping landscape.

Where is Costco?

As of early September 2023, there are 597 Costco stores in the United States, in 46 states. Only Maine, Rhode Island, West Virginia and Wyoming are without a Costco store.

As you might guess, the state with the most Costco locations in the US is California, with 134 stores – about 22% of all Costco stores in the US.

Washington has 33 stores.

Costcos can be found in many countries around the world; there are 107 locations in Canada, 29 in the United Kingdom, 32 in Japan, 15 in Australia, 40 in Mexico, 2 in France and 4 in China. And many more in places as diverse as Taiwan, Spain and Sweden. As of early September, 2023, there are 859 stores on the planet.

Costco has a little over 200,000 employees in the USA and a bit over 300,000 worldwide. And yes, their headquarters are in Kirkland, Washington.