Not to be confused with COSCO, Cosco (India) Limited, Cusco, or CUSCO Japan.
Costco Wholesale
Traded as
Industry Retail
Predecessor Price Club
Founded July 12, 1976 (1976-07-12) (as Price Club)
San Diego, California, U.S.
September 15, 1983 (1983-09-15) (as Costco)
Seattle, Washington, U.S.
Headquarters Issaquah, Washington, United States
Number of locations
705 warehouses[1] (2016)
Area served
United States, Canada, Mexico, United Kingdom, Japan, South Korea, Taiwan, Australia, Spain, Lebanon (Known as Wesley's Wholesale in Lebanon)
Key people
Jeffrey Brotman
James Sinegal
W. Craig Jelinek
(President and CEO)
Brands Kirkland Signature
Revenue Increase US$116.199 billion (2015)[2]
Increase US$2.377 billion (2015)
Total assets Increase US$33.44 billion (2015)[2]
Total equity Decrease US$10.61 billion (2015)[2]
Number of employees
117,000[3] (2016)
Costco's original logo. Used until 1993, but stores continued to carry the logo until 1997.

Costco Wholesale Corporation is an American membership-only warehouse club that provides a wide selection of merchandise. It is currently the largest membership-only warehouse club in the United States,[4] and as of 2015, the second largest retailer in the world (after Walmart).[5]

Costco's worldwide headquarters are in Issaquah, Washington. The company opened its first warehouse in 1983 in Seattle. Through mergers, Costco's overall corporate history dates back to 1976, when its former competitor Price Club was founded in San Diego, California.[6][7][8]

As of 1 July 2016, Costco has a total of 705 warehouses, spread throughout the United States (493), Canada (90), Mexico (36), United Kingdom (27), Japan (25), South Korea (12), Taiwan (12), Australia (8), and Spain (2), Lebanon (2).[1][9]

Compared with Walmart's reputation for "low prices" and Target's for selling "cheap chic", Costco is known for offering low-price, limited-selection "retail treasure hunts", where "one's shopping cart could contain a $50,000 diamond ring resting on top of a 64-ounce vat of mayonnaise".[10]


Costco in Tlalpan, Mexico City
Australia's first Costco outlet, at Docklands, Victoria
Costco in Hashima, Gifu, Japan

Price Club and the birth of the retail warehouse concept

Main article: Price Club

The entire history of Costco began with Sol Price and his son, Robert, opening the first Price Club warehouse on July 12, 1976 on Morena Boulevard in San Diego, California, thus giving birth to a totally new concept: a retail warehouse club. The Price family placed Price Club Warehouse #1 inside a series of old airplane hangars[7][8] previously owned by Howard Hughes; that warehouse, now known as Costco Warehouse #401, is still in operation today.

Costco opens

Costco opened its first warehouse in Seattle, Washington, on September 15, 1983,[7] by James (Jim) Sinegal and Jeffrey H. Brotman.[11] Sinegal had started in wholesale distribution by working for Price at both FedMart and Price Club and Brotman, an attorney from an old Seattle retailing family, had also been involved in retail distribution from an early age.

The "PriceCostco" merger

In 1993, Costco and Price Club agreed to merge operations themselves after Price declined an offer from Sam Walton and Walmart to merge Price Club with their warehouse store chain, Sam's Club.[12] Costco's business model and size were similar to those of Price Club, which made the merger make more sense for both firms.[8] The combined company took the name PriceCostco, and memberships became universal, meaning that a Price Club member could use their membership to shop at Costco and vice versa. PriceCostco boasted 206 locations generating $16 billion in annual sales.[7] PriceCostco was initially led by executives from both companies, but then the Price brothers soon left the company in 1994 to form Price Enterprises,[8][13] a company unrelated to the current Costco.[14]

In 1997, the company changed its name to Costco Wholesale Corporation and all remaining Price Club locations were rebranded as Costco.[7][8]


Map of Costco warehouses in the US (August 2010).

As of July 1, 2016, Costco has 705 warehouses, worldwide:[1]

Other company milestones

On April 26, 2012, CNBC premiered its documentary, The Costco Craze: Inside the Warehouse Giant.[16]

In 2014, Costco was the third largest retailer in the United States.[17] That year Costco announced plans to open an online store in China using Alibaba Group.[18]

Costco today

In the United States, Costco's main competitors operating membership warehouses are Sam's Club and BJ's Wholesale Club.[19] Costco employs about 174,000 full and part-time employees.[3] In 2016, Costco had 85 million members.[20]

Costco was the first company to grow from zero to $3 billion in sales in under six years.[7] For the fiscal year ending on August 31, 2012, the company's sales totaled $97.062 billion, with $1.709 billion net profit.[3] Costco is 18th on the 2015 Fortune 500.[21] The ACSI (The American Customer Satisfaction Index) named Costco number one in the specialty retail store industry with a score of 84 in 2014.[22]

As of December 2013, Costco's board of directors is chaired by co-founder Jeffrey H. Brotman and includes two officers of the company: President/CEO W. Craig Jelinek and CFO Richard A. Galanti.

Sales model

Costco warehouse interior in Mountain View, California

Costco focuses on selling products at low prices, often at very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Furthermore, Costco does not carry multiple brands or varieties where the item is essentially the same except when it has a house brand to sell, generally by the Kirkland Signature label. This results in a high volume of sales from a vendor, allowing further reductions in price, and reducing marketing costs. If Costco management feels the wholesale price of a product is too high, they will refuse to stock the product. For example, on November 16, 2009, Costco announced that it would stop selling Coca-Cola products because the soft-drink maker refused to lower its wholesale prices.[23] Costco resumed selling Coca-Cola products on December 14, 2009.[24][25] Costco also saves money by not stocking extra bags or packing materials; to carry out their goods, customers must bring their own bags or use the merchandise shipping boxes from the company's outside vendors.

Lighting costs are reduced on sunny days, as most Costco locations have several skylights. During the day, electronic light meters measure how much light is coming in the skylights and turn off an appropriate percentage of the interior lights. During an average sunny day, it is very normal for the center section of the warehouse not to have interior lights in use.[26]

Most products are delivered to the warehouse on shipping pallets and these pallets are used to display products for sale on the warehouse floor. This contrasts with retail stores that break down pallets and stock individual products on shelves. Costco limits its price markup on items to 15%;[27] most products have an 8% to 10% markup, while the Kirkland Signature brand products have a 15% markup.[28]


Costco's membership comprises a large, loyal, and affluent constituency, with an average annual household income of $156,000 a year.[29] Costco stores are only open to members and their guests, except for purchases of gasoline and liquor in some U.S. states because of state law, optical prescriptions and prescription drugs because of federal law, and (in some regions) purchases made with Costco Cash Cards. While Costco welcomes guests to accompany members, only members are authorized to pay for items (unless the guests have Costco Cash cards).[30] Memberships purchases are paid in advance for one year.


Forms of Payment

Cash Cards

Costco Cash Cards can be purchased in the warehouse or online,[38] and members can load them with money to make non-cash purchases at all Costco warehouses in Australia and the United States. Because Costco gas stations take only Visa credit cards (United States locations only), Costco Cash, debit cards, and MasterCard (Canadian locations only), people who can only pay for gas by check or cash must purchase a Costco Cash Card before filling up.

A Costco membership is not required to make purchases with a Costco Cash Card. A non-member may not purchase or re-load a Costco Cash Card; however, they may spend more than the total value of their cash card in-store provided they pay in cash or approved debit cards for the remaining balance.[39]

Credit cards

Online, accepts Discover Card, MasterCard, PayPal Credit, and Visa cards.[30]

At Costco stores and gas stations, until June 19, 2016, American Express is the only accepted credit card in Japan, the United Kingdom, and the United States, because Amex charges Costco very low interchange fees (a percentage of revenue from total sales made); as Costco's margins are low in comparison to other retailers'. Other forms of payment accepted at Canadian, United Kingdom, and United States Costco locations include cash, Costco Cash Cards, Costco credit cards, checks, EBT cards (food stamps), and PIN-based debit cards (Interac in Canada). Costco also accepts Flexible spending account (FSA) debit cards for qualifying purchases at the optical and pharmacy departments in the U.S.

On February 12, 2015, it was announced that the 16-year partnership between American Express and Costco will dissolve June 19, 2016. As of June 20, Costco will no longer accept American Express credit cards, and cardholders of TrueEarnings Costco-American Express cards will no longer be able to use them anywhere after June 19, 2016. American Express mentioned that it and Costco had failed to reach an agreement that would have continued their partnership beyond June 19, 2016, the end date of their current contract. On March 2, 2015, Costco announced that Citigroup Inc. will become the exclusive issuer of Costco's credit cards and that Visa Inc. will replace American Express as the credit-card network for Costco’s stores starting on June 20, 2016. Costco will accept other Visa cards under the new agreement, as well.[40][41][42]

AmEx has been sued by shareholder Plumbers and Steamfitters Local 137 Pension Fund [43] lead for failing to reveal the expected financial impact on its firm of the loss of Costco business, which is expected to be substantial.[44] The Costco partnership represented 8%, or $80 billion, of AmEx's billed business and about 20%, or about $14 billion, of its interest-bearing credit portfolio, according to Richard Shane of JP Morgan Chase & Co.[42]

The impact of this change on consumers will be significant, because Costco is one of the few large-scale retailers that only accepts American Express and not Discover Card, MasterCard, or Visa credit cards, although Costco does accept MasterCard and Visa debit cards. The TrueEarnings Costco-American Express card does not have an annual fee and offers cash back on certain tiers of purchases; to retain TrueEarnings members and attract new American Express customers, AmEx is offering a deal which includes zero percent interest for six months, followed by a variable rate at 15.24%.

Food stamps in the U.S.

Until 2009, Costco did not accept food stamps. As of March 14, 2009, an article in the Pittsburgh Post-Gazette quoted Jim Sinegal, co-founder and president of the company, as saying, "Generally we don't have customers who use food stamps."[45]

In response to the poor economy, as well as competitor BJ's Wholesale Club's decision in April 2009 to accept electronic food stamp benefits chainwide,[46] Costco announced in May that year that it would accept food stamps on a trial basis in two New York City stores, starting in June 2009, and depending on its success, might expand it to all New York City stores.[47] The company subsequently announced plans to expand the program beyond New York City, targeting first the "hard-hit areas like the "Central Valley of California", Indiana, and Michigan, expanding to "half its roughly 410 U.S. stores by Thankgiving", and then going nationwide.[48]

Return policy

Costco memberships can be refunded in full at any time before they expire.[49] Costco guarantees almost all of their products with a full refund. Exceptions include cameras, camcorders, cellular phones, computers, digital audio players, projectors, and televisions; these may be returned within 90 days of purchase for a refund, for any reason. After 90 days those returns must be done through the manufacturer according to the terms of the warranty. Also excepted are tires (which are covered by their manufacturer's separate defects and treadwear warranties) and batteries (which are covered by a 36/100-month warranty, where they may be replaced for free in the first 30 months and are covered under a pro-rated warranty for months 31-85). Costco has negotiated with manufacturers to extend the manufacturer's warranty to two years for new computers and televisions (five years on televisions sold by Costco in the UK).[49]


Costco has a wide variety of changing inventory and is known for carrying products for a time, then discontinuing them or using them as seasonal products. Over the years, Costco has gradually expanded its range of products and services. Initially, it preferred to sell only boxed products that could be dispensed by simply tearing the stretch wrap off a pallet. It now sells many other products that are more difficult to handle, such as art, books, caskets, clothing, computer software, fine wine, furniture home appliances, home electronics, hot tubs, jewelry, perishable items (such as dairy, fresh baked goods, flowers, fresh produce, meat, seafood), solar panels, tires, and vacuums. Many warehouses also have gas stations, pharmacies, hearing aid centers, optometrists, photo processors, and tire garages.

Some locations have liquor stores, often kept separate from the main warehouse in order to comply with liquor license restrictions. In some states (such as Texas), the liquor store must be owned and operated by a separate company with separate employees.[50] In 2006, Costco lost a lawsuit against the state of Washington in which it was seeking to purchase wine directly from the producer, bypassing the state retail monopoly. In Australia, Costco has to comply with regulations set by each state they choose trade in; their first store in the state of Victoria benefits from some of the most liberal alcohol licensing laws in the country, with retailers permitted to sell alcohol on shelves within the store, in a manner similar to most European countries. In the Canadian province of Quebec, beer and wine are sold within the stores from pallets.

Kirkland Signature

Kirkland Signature branded bottled water, pictured in 2005

"Kirkland Signature" is Costco's private label. It is found at Costco's website, Costco warehouses, and, and is trademarked by the company. The name is derived from the location (from 1987 to 1996) of Costco's corporate headquarters, Kirkland, Washington.[51]

Costco introduced Kirkland Signature as its private label in 1992. The idea was to identify categories in which a private label product could provide brand name quality at discounted prices.[52] To counteract the consumer confidence problem common in store branding, Kirkland Signature occasionally employs co-branding. According to Costco, while consumers may be wary of same-store-branding, they are less likely to be wary of brands that they are familiar with and trust.[53]


The Costco Connection is a magazine sent free to members of Costco; it can also be accessed online by anyone, free of charge.[54] The magazine, established in 1987,[55] features articles which regularly tie into the corporation along with business, celebrity features, cooking, entertaining, health, home improvement, and social articles, as well as coupons and ads. MediaPost reports: "While about 90% of the magazine’s advertising is co-op, increasingly national advertisers such as Procter & Gamble are buying space, notes Roeglin -- presumably because of the pub’s gargantuan reach and the data it has on its subscribers (whose average household income is $156,000 a year). 'We see about 56% of our subscribers a month buy something at one of our stores based on something they've read in the magazine,' says Roeglin."[29] The magazine is the largest-circulation print monthly in the United States.[29] Costco also publishes the Costco Household Almanac and a cookbook series.[56]


Concierge service

Costco offers a free "concierge" service to members who purchase electronics, to help answer questions regarding setup and use and avoid potential returns due to not understanding how to use the products.[49]

Costco acts as an investment broker and travel agent. Costco has an agreement with Ameriprise for auto and home insurance. In 2004 Costco offered an original artwork by artist Pablo Picasso on their online store; more recently a highly regarded 1982 Mouton Rothschild wine was offered as well as other rare wines in rotation.

Costco Photo Center is a multi-functional photography printing lab offering services at the warehouses as well as through their web site, The website provides free unlimited digital file storage with a current membership. Previous to May or June 2010, Costco had an agreement with for custom book and calendar publishing. Now, they print the photobooks and calendars themselves.

Costco Auto

As of September 2015, Costco is the second largest auto seller in the US, just behind AutoNation.[57] Costco regularly teams up with various automobile manufacturers to offer special deals to customers, e.g., Polaris (a leading seller of powersport vehicles) in 4Q2015[57] and General Motors from October 2015 through January 2016.[58] Addicted to Costco lists the following as some benefits of the Costco Auto Program:[58]

Costco business services

On March 9, 2005, NOVA Information Systems (NOVA) partnered with Costco to market and support payment processing services to Costco Canada's Business Executive Members.[59]

Costco Optical

Costco Optical ranks as the fifth-largest optical company in the US, as of 2015.[60] Optometrists working at Costco locations will see patients without Costco memberships,[61] although a membership is required to fill a prescription at the optical department.[62]

Costco Travel

Costco Travel is a wholly owned subsidiary of Costco Wholesale and offers leisure travel to Costco members of the United States and Canada.[63] The program was established in 2000 as a service to Costco members. Costco Travel's offices are located in Issaquah, Washington, adjacent to Costco's corporate headquarters. Costco Travel employs 290 travel professionals, all them Costco employees.

The program offers vacation packages to the Caribbean, Europe, Florida, Hawaii, Las Vegas, Mexico, and the South Pacific. Other products include car rentals, cruises, guided vacations, and theme park packages. Select products feature additional benefits for Costco Executive Members.

The program is marketed directly to Costco members through various Costco avenues, including the Travel Guide to Savings (found in all U.S. Costco warehouses) and in the Travel section of

Food service

A food concession stand at the Costco warehouse in Overland Park, Kansas

All but a few Costco locations have a food court.[64] Some food courts are inside, and some are outside,[65] but the menu is essentially the same, offering a quarter-pound 100% beef hot dog or Polish sausage and 20 fl. oz. (591 ml) drink (with refills) for US$1.50, the same price since 1985.[66][67] In Australia, the hot dog is made of pork and is sold at AUD$1.99 with large soda. In Canada, the price for a hot dog and a 20 fl. oz. (591 ml)-size soda with refills is C$1.50.[68] In Mexico, the hot dog is made of 100% beef and includes a drink (with refills) for Mex$ 30. In the UK, the hot dog is also made from beef; customers can also get a drink (with refills) for £1.50. Costco sold more than 82 million quarter-pound (113 g) hot dogs in its food courts in 2008.[68] Cheese, pepperoni, veggie, or combo pizza is also available in most locations, and can be ordered to go at many locations, making Costco arguably the 14th largest pizza chain in the US in 2010.[69] Frozen yogurt is also served in chocolate, vanilla, or swirled together. Also offered are berry smoothies, latte freeze (without chocolate), mocha freeze (with chocolate), beef bake, chicken bake,[70] bulgogi bake,[71] turkey provolone sandwiches, twisted churros, chicken Caesar salads, and in some locations, gelato. French fries are also offered in some locations. Due to slow sales, the pretzel was replaced by the churro.[72] The nutrition data for the Costco Food Court items is posted online.[73] In April 2013, Pepsi replaced all Coca-Cola fountain drinks at US food service locations, but the hot dog-soda combo will continue to cost US$1.50.[74]

Online photo site

In December 2005, Costco signed an agreement with PhotoChannel Networks Inc., whereby Costco could deploy the PNI Digital Media Platform to offer online photo printing for Costco members through the website.[75]

On July 17, 2015 Costco disabled their online photo site.[76] In common with other retailers,[77] there is currently no confirmation about whether hackers had stolen Costco customers' photographs or data. As of August 1, 2015, Costco was estimating the website might return in mid August, after a four-week outage.[78]

Online shopping

On April 17, 2001, Costco Wholesale opened a B2B (Business to Business) online shopping site at for faster and easier business shopping.[79]

The domain attracted at least 58 million visitors in 2008, according to a survey.[80] is for United States members; is for Canadian members, and other countries, such as Mexico, South Korea, and the UK, each has its own online Costco shopping website.

Animal welfare concerns

In 2010, Mercy for Animals conducted an undercover investigation at Buckeye Veal Farm, a veal supplier to Costco.[81] Immediately following the investigative release, Costco adopted a policy against purchasing veal from producers that use the crate-and-chain production method.[82] The case prompted Ohio decision-makers to vote in favor of a veal crate phase-out in the state.[83]

In 2012, Mercy for Animals conducted an undercover investigation at a pork supplier to Costco, Walmart, Safeway, Kroger, and Kmart.[84] Before the public release of the investigation, Costco announced they would begin requiring their pork suppliers to phase out gestation crates.[85][86]

In 2015, The Humane Society of the United States conducted an undercover investigation at an egg supplier to Costco.[87] An undercover worker at Hillandale Farms, a major egg supplier to Costco, filmed conditions in which egg-laying hens lived in tiny, wire cages. [88] Following the investigations, several celebrities including Brad Pitt and Ryan Gosling publicly wrote to Costco to address this issue.[89] Following efforts by animal protection nonprofits include The Humane League,[90] Costco released an updated commitment to source exclusively cage-free eggs in its operations.[91]

Labor relations

While some former Price Club locations in California and the northeastern United States are staffed by Teamsters,[92] the majority of Costco locations are not unionized although there seems to be a move in 2012 to unionize some locations in Canada.[93] The non-union locations have revisions to their Costco Employee Agreement every three years concurrent with union contract ratifications in locations with collective bargaining agreements. The Employee Agreement sets forth such things as benefits, compensations, wages, disciplinary procedures, paid holidays, bonuses, and seniority. The Employee Agreement is subject to change by Costco at any time and offers no absolute protection to the workers. As of March 2011, non-supervisory hourly wages ranged from $11.00 to $21.00 in the U.S., $11.00 to $22.15 in Canada, and £6.28 to £10.50 in the United Kingdom. In the U.S. as of 2005, eighty-five percent of Costco's workers had health insurance, compared with less than fifty percent at Walmart and Target.[94]

Product-demonstration (e.g., food samples) employees work for an outside company. In the western U.S., the company is called Warehouse Demo Services, Kirkland, Washington.[95] Costco also uses Club Demonstration Services, based in San Diego, California.[96] In Canada, demonstrations are done exclusively by Professional Warehouse Demonstrations.[97] Demonstration employees receive a pay and benefit package that is less than that of Costco employees.[98]

In 2014, The Guardian reported that Costco is a client of Charoen Pokphand Foods. Over six months, The Guardian traced down a supply chain from slave ships in Asian waters to leading producers and retailers. Costco has published a statement saying it has had a supplier code of conduct since 1999 which does not allow this practice, and that independent auditors check for violations regularly.[99][100][101][102]

International locations

Warehouses outside the US are similar to those in the US. Layout, signage, and even parking lot markings are generally identical to warehouses in the US. Food court menus are tailored to international tastes, with meat pies on offer in Australia, poutine in Canada, seafood-topped pizza in Asian and Mexican locations, clam chowder in Japan, South Korea, and Taiwan, and jacket potatoes in the UK.[103] Additionally, Costco has led a strategic initiative within the past year to enhance their merchandise mix available within international warehouses to tailor products to local tastes, with a mix of both American and local products available.

Expansion worldwide

Costco announced it was opening 28 new locations in 2013, the most in one year since 2007.[104]

Largest location

In 2005, the world's largest Costco was located in Hillsboro, Oregon.[105] In 2015, Costco completed an expansion in Salt Lake City, UT, making it the new largest Costco at 235,000 square feet.[106] In 2011, Costco's highest volume store was in Seoul, South Korea.[107]

Costco Business Centers

Difference from regular Costcos

Costco Business Centers are roughly similar to Costco warehouses, but are slightly smaller; carry far more business merchandise; generally carry more options for each type of product carried; and do not carry numerous consumer items like clothing, jewelry, media, and tires.[108] They are open to all Costco members (a business card is not necessary), although they are designed and merchandised to serve small businesses. They do not offer most of the consumer-oriented services found at regular Costco warehouses, but some locations do have a food court or a gas station or both. Unlike regular warehouses, Costco Business Centers have a Print & Copy Center which provides professional printing services, as well as large parking spaces for trucks. They also have their own coupon books issued separately from regular warehouses and are capable of delivering goods to businesses in bulk quantities.


As of June 2016, there are 14 Costco Business Centers, located in Phoenix, Arizona; California (Commerce, Hawthorne, Hayward, San Diego, and Westminster); Denver, Colorado; Morrow, Georgia; Bedford Park, Illinois; Hackensack, New Jersey; Las Vegas, Nevada; and Washington (Lynnwood, and Fife).[109] In fall 2015, the Salt Lake City, UT location expanded into both a regular warehouse with business type items.

Discontinued concepts

Costco Home

The first Costco Home warehouse debuted in 2002 in Kirkland, Washington. The warehouse's concept was to combine the value, setting and members-only elements of Costco's warehouse clubs with the product array one would find at an upscale home store, such as Fortunoff or Crate & Barrel. The Costco Home warehouses sold furniture, housewares, kitchen products and accessories from higher-end brands such as Lexington, Ralph Lauren and Waterford[110] in a warehouse-club setting. Costco claimed that, similar to its main warehouses, it accepted lower margins in return for greater volume with minimal overhead.

Over time, the concept was adjusted to include home electronics, some major appliances, office furniture, and a large selection of outdoor furniture and window treatments. Costco also partners with Glentel subsidiary WIRELESS etc. to sell mobile phones and plans in Canada and Wireless Advocates in the US.

On April 2, 2009, the company announced that it would be abandoning its Costco Home concept, closing the two existing stores in Kirkland, Washington and Tempe, Arizona on July 3, 2009, and abandoning plans for a third store on the West Coast.[111] The company cited cutbacks in consumer spending on home products and its interest in focusing on its core business as the main reasons.

See also


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