Inflation and Costco

Costco buys the majority of its merchandise directly from manufacturers for shipment either directly to Costco’s selling warehouses or to a consolidation point where various shipments are combined so as to minimize freight and handling costs. As a result, Costco eliminates many of the costs associated with multiple step distribution channels, which include purchasing from distributors as opposed to manufacturers, use of central receiving, storing and distributing warehouses, and storage of merchandise in locations off the sales floors. (1)

For operations, Costco's in charge of managing their store brand Kirkland Signature. Since they have domain over that brand, they are better able to control the caliber of their product. They also maintain the packaging assembly-line in order to accomplish the goal of having an efficient shipment arrangements, and low shrinkage rates. This way Costco can have low rates for quality goods. By keeping their operational costs low they can continue to pass the savings onto their customers.

The company’s first location was opened in 1976 under the name of Price Club. Originally it served only small businesses, but later on it found that it could increase its sales by extending its services to non-business members. The first warehouse operating under the name, Costco, began functioning in 1983 in Seattle, Washington. In 1993 Costco and Price Club merged. Today, the company operates under Costco Wholesale name and has its warehouses all across the world. As of the end of 2015 it has close to 700 warehouses in total located in United States, Canada, United Kingdom, Mexico, Japan, Australia, Spain, Taiwan and Korea. Costco’s common stock trades on the NASDAQ Global Select Market under the symbol

In order for Costco to stay competitive in the market and ahead of its competitors, it is essential to venture into different products and services. Costco’s main products vary, which include: groceries and frozen products, fresh meats and produce, bakery goods, beverages and liquors, health and beauty products, seasonal goods, office products, appliances and electronics. To increase Costco’s product differentiation over its competitors and increase sales, Costco began to introduce other products; such as pharmacy, gasoline, auto insurance, and a food court. In addition, extends more services to executive card members that include check printing, payroll services, identity protection, free roadside assistance with Costco’s auto insurance, and traveling benefits.

Did you know that Costco has over 500 warehouses that operate in 40 different states! Two men, James Sinegal and Jeffrey Brotman, founded Costco in 1983 (Company Overview, 2014). Costco’s warehouse has one of the largest product category selections when being to compared to other warehouses. Costco is known for carrying the best quality brands at low prices. According to Jim Sinegal, the Company 's Co-Founder and Director, "Costco is able to offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing and accounts receivable. We run a tight operation with extremely low overhead which enables us to pass on dramatic savings to our members (Company Overview, 2014)”.

In fiscal year 2005, Costco plans to open between 22-25 new warehouses worldwide, and hopes to double the number of warehouses within the next 10 years. In addition to the physical locations, Costco.com, its "virtual warehouse" is projected to become a $5 billion business, and if sales continue to grow anywhere near the 66% growth in 2004, this goal is entirely possible. In 2004 it also rolled out the E-commerce order stations in the warehouses to enhance the top-notch, special-order kiosk offerings.

Costco is one of the most profitable retail stores in the United States at the moment. This is in spite of the prevailing tough global economic times and stiff competition from stores such as Wal-Mart and Target. Costco, a members’ wholesale retail store, was founded in 1983 in Washington by Jeffrey Brotman, who serves as the current Chairman of the board of directors and James Sinegal, the current company president. Costco has not been spared by the current global economic conditions. They have affected it in a number of ways that have made the company’s management respond in a manner that is meant to ensure that the business not only survives but grows even stronger. First, Costco has taken strong measures to keep

Costco’s first store location was opened in 1976, under the name Price Club. It started out as a small business. In 1983, they made the change to the warehouse club they are today where they opened their first warehouse location in Seattle. As of November 20th of this year, Costco has 697 warehouses worldwide (Costco company profile).

The first Costco location was open in 1976 under the name Price Club, which was dedicated only to small-business. In 1983, the first Costco warehouse location opened in Seattle open to the general public. Throughout Costco’s main philosophy, to keep costs down and pass the savings on to their members, the company became the first retailer to reach $3B in sales in less than six years since its debut (Costco, n.d.) and in 2014, according to National Retail Federation (2014) the Company was the third largest retailer in the United States, behind Wal-Mart Store and The Kroger Co. Today, Today Costco has 698 warehouses worldwide, Canada (89), United Kingdom (26), Australia (8), Mexico (34), Taiwan (10), South Korea (12), Japan (20), and Spain (2) and over 200,000 full time and part time employees (Costco, n.d).

According to Blacktown City Council (2014), Costco Wholesale Corporation operates an international chain of membership warehouses which carry quality brand name merchandise at substantially reduced prices compared to other conventional wholesale or retail outlets. It began its operations in 1983 in Seattle, Washington and later merged with The Price Company in October 1993 operating under the name PriceCostco, had 206 locations generating $16 billion in annual sales (Costco Wholesale, 2015). As of December 2014, the Company operated a chain of 671 warehouses in 43 states, Washington, D.C., and Puerto Rico (474 locations), nine Canadian provinces (88 locations), Mexico (34 locations), the United Kingdom (26 locations), Japan (20 locations), Korea (11 locations), Taiwan (10 locations, through a 55%-owned subsidiary), Australia (seven locations) and Spain (one location). The Company’s online business also operates websites in the U.S., Canada, U.K., and Mexico (Costco Annual Report, 2014).

Costco has 36,347 million total assets and has 10,778 million shareholders in Sep 3, 2017. Just to give a little bit of context third largest retailer in the USA and the second largest retailer in the world. With 741 locations, worldwide and 231,000 employees. They are well known across the world. In the USA Costco has 8% market share but globally 15.7% for Q3 of 2017.

Combining the turnover with the operating efficiencies achieved via volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities allows Costco to operate profitably at significantly lower gross

There are over 1,178 warehouse club locations across the U.S. and Canada, including Costco’s US warehouses. Unfortunately for the industry, expansion through small-size stores by the industry’s major players is expected to

Wal-Mart operates over 6,100 stores worldwide, employs 1.8 million associates, and operates in 15 different countries (Annual Report, 2006, p. 12). Lee Scott,

In 2005, Wal-Mart’s sales increased to312.4 billion dollars, more than 6200 companies around the world including 3800 stores in the U.S.