Launched in 1983 with one warehouse in Seattle, WA, Costco has grown to become the world’s third largest retailer with almost 900 stores across 14 countries and four continents. The North American market, with 617 warehouses in the United States, 109 in Canada and 41 in Mexico, represents 85 percent of its store locations.

Its sales for fiscal year 2024 hovered around $250 billion, which rank only behind Walmart and Amazon. Costco employs 330,000 people worldwide and is the world’s largest membership-based retailer with close to 139 million cardholders and more than 77 million paid memberships. It’s annual membership fees range from $65 to $130, making up the majority of its profit and allowing the company to pursue its low markup strategy.

The company prides itself on running a tight ship with limited SKUs, low overhead and miniscule profit margins. The total SKU count in a Costco warehouse is less than 4,000 (compared to a 140,000 in a Walmart Supercenter).

The open feel of its warehouse stores is mimicked in its Issaquah, WA, headquarters, where no one, including the CEO, has an office. Everyone works from a cubicle with conference rooms throughout for meetings.

Costco was co-founded by Jim Sinegal and Jeff Brotman, who soon operated from their headquarters in nearby Kirkland, WA, with that city lending its name to Costco’s well-known house brand, Kirkland Signature. Costco was not the first retailer to use the membership approach. The concept was pioneered by Sol Price who founded FedMart in 1954, and Price Club in 1976 with his son, Robert Price. In fact, Sinegal began his career working for the elder Price at FedMart.

Costco went public in 1985 with 17 warehouses nationally and 1,950 employees.

In 1993, Costco and Price Club agreed to merge operations. The merged company took the corporate name PriceCostco, with a membership from either brand allowing access to all stores. At the time, PriceCostco had more than 200 locations with about $16 billion in annual sales.

Initially, the merged company was run by executives from both teams, but the Prices left a year later to form another warehouse club chain in the Caribbean and Central America (PriceSmart).

Costco moved its headquarters from Kirkland to Issaquah in 1996, and that same year began converting the original Price Club stores to the Costco brand. It officially reverted to using the Costco name and stock symbol in February 1997. By 2014, Costco had achieved its current position as the third largest retailer in the United States.

Expanding warehouse operations around the globe began in Canada in 1985 and in Mexico in 1992. The first European location opened in Great Britain in 1993.

The first Costco in Asia opened in Seoul, Korea in 1994. They entered Taiwan in 1997 and Japan was added in 1999, with China getting its first warehouse in 2019. Australia joined the mix in 2009 with the first New Zealand opening in West Auckland in 2022. Today, Costco can be found in 14 different countries. The North American warehouses represent the three largest markets in terms of locations.   

Its other locations around the globe are: Japan: 36 warehouses; United Kingdom: 29; Korea: 19; Australia: 15; Taiwan: 14; China: 7; Spain: 5; France: 2; Iceland: 1; New Zealand: 1; Sweden: 1.

Even though it’s been 40 years since the first Costco warehouse opened, its company website still noted that Costco is a growth company, with opportunities in both existing and new markets.

Though the basic floor plan and concept is similar throughout the world with limited SKUs and pallet displays, the warehouses feature items specific to each country and the part of the world in which they are located, as well as items that are commonly found in their U.S. locations. There are multi-level stores in Japan and elsewhere. In addition to warehouses, Costco also has international e-commerce sites in many countries through which it does business.

“Global collaboration among our buyers is a huge part of our success as a company,” said Bob Huskey, vice president of produce. “The benefits of going to market as one global entity are tremendous, as are the benefits of the sharing of ideas and concepts between our buyers that are based in each country. We help each other, we learn from each other and our suppliers should look at us as one buying entity, not as buyers in 14 different countries.”

Beyond borders

During the October International Fresh Produce Association trade show in Atlanta, the Costco teams from all over the globe got together to discuss how to keep pushing the collaborative programs forward as a group, so Costco expects to see more in the future.

While the produce teams are autonomous, there is a growing effort to work across borders to create more efficient supply chains and take advantage of increased buying power. There are global buys on California citrus and grapes and they share information on a regular basis amongst all countries.  This communication has resulted in several new global buying programs including Orah mandarins from China, Shingo pears from its  Korean suppliers, Lychee from China as a few examples.  The buyers in each country help coordinate these programs for the buyers in the other countries that are interested in bringing in the items.  This has allowed countries to take advantage of quickly changing demographics and demands.

In addition, having access to more buyers across more countries helps the Costco teams identify additional sources of supply for items that they are having trouble sourcing locally. During supply shortages the buying teams can reach out to each other for support.