The Costco item selection process
The Costco item selection process
Costco is well-known for its limited SKUs with about 95 specific products populating the produce section of the average warehouse, but that doesn’t mean it is a stagnant list.
One category with continual change is packaged salads. Costco Buyer Mark DeCosta, who has the category as part of his portfolio, said there are a couple of flavors that have achieved a pallet position on a year-round basis. Other kits may rotate seasonally, focusing on consumer taste and a desire to add punch to category sales. Most produce items featured at Costco earn a full pallet position following the retailer’s marketing strategy of concentrating its efforts on relatively few SKUs, achieving unmatched efficiency compared to its competitors, and low prices for its members.
Each salad kit has a floor pallet position in the cooler as well as slots in the pallet racks above the floor, always giving the customer the appearance of a well-stocked warehouse. These are very popular items among members and sales are constant as is the replenishment of the floor display.
At Costco’s headquarters in Issaquah, WA, DeCosta, and team members taste new flavors shipped to the office from its salad suppliers. “This is an ongoing process,” DeCosta said.
All skus go through a similar process before getting their slot in the warehouse. Each new potential item is evaluated with members of the Costco team. Whether salad kits or any other item, he said this process can go on for quite some time.
DeCosta added that the success of any salad is defined by the number of members who will make that repeat purchase. When each new flavor is introduced, there is an excitement and many members will give it try. The winners have those members coming back and back again. DeCosta enjoys this selection process as he calls it a great way “to bring the restaurant experience home for our members.”
Like most of the Costco produce buying team, DeCosta has served a long tenure. His first job for the retailer was in a warehouse in Prescott, AZ, right after college in 1997.
Two years later he and his wife moved to Seattle and DeCosta became an inventory control specialist on the produce team. A couple years later, he was promoted to assistant buyer and in 2004, he became a buyer, which is the position he still holds. “I have been through most of the categories,” he said. “This is a relationship business and I know a lot of people in this industry.”
In 2012, DeCosta recalled that the Costco produce team made a big push toward utilizing local produce and he was asked to move to the Midwest to establish a local program for the center of the country. It was originally a temporary move, but in 2014, it became permanent and DeCosta has worked out of the Chicago regional office ever since.
DeCosta does make frequent trips to Seattle to work with the home office produce team. “My job is to give our members the best possible experience from each item I buy,” he said.
In fact, he loves his job and calls himself a teaching buyer. “I enjoy teaching our vendors what Costco is looking for. It’s a big part of my job,” he said.
It is this desire to continually improve the members’ experiences that leads this native Californian to believe that controlled environment agriculture has a big future in the produce industry. “It’s not going to mean much on the West Coast where there is an abundance of product and it gets to the warehouse within one day of harvest, but in Chicago, it takes four days. It’s a game changer when you can deliver fresh produce in one day.”
