The history of Costco: How one wholesale club became a blueprint for success
Costco Wholesale, known for bulk bargains and giant rotisserie chickens, has enjoyed unprecedented success since it began as the world’s first membership warehouse club.
The retail giant’s model – in which members pay annual fees to shop for bulk goods at lower prices – resonates with some 128 million Costco cardholders worldwide. As of April, Costco ranked 11th on the Fortune 500 by total revenue, raking in over $248 billion annually and boasting a market cap north of $320 billion.
How did Costco get its start? Here’s the story.
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History of Costco
Costco’s story began several years before its first store opened in Seattle. The company’s first location opened in San Diego in 1976 under the Price Club name. Founded by Sol Price, Price Club was the world’s first membership warehouse club, but when it originally opened, it only served small businesses.
Price had previously run FedMart, another member-exclusive discount store – and one of these locations employed a young Jim Sinegal as a grocery bagger in 1955.
A Costco Wholesale warehouse sign is seen outside of a store in Silver Spring, Maryland, on August 5, 2023. (Photo by MANDEL NGAN/AFP via Getty Images)
Sinegal later became executive vice-president of merchandising, distribution and marketing for Price Club, and was instrumental in expanding the membership model to non-business memberships. In 1983, Sinegal and Jeff Brotman opened the first Costco in Seattle. A month later, the pair opened a second warehouse in Portland, Oregon. By the end of 1983, they had opened a third location in Spokane, Washington.
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Over the next decade, both Price Club and Costco Wholesale continued to expand, and in 1993, the two merged. The company resumed the Costco name in 1997.
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Today, Costco has more than 850 stores around the globe. The Kirkland, Washington-based company is now the world’s third-largest retailer.
What’s the secret to Costco’s success?
Costco says it has remained focused on three key qualities:
- Commitment to quality goods and low cost
- "Entrepreneurial spirit"
- Focus on employees: Costco has been consistently known for offering fair wages and good benefits.
Costco by the numbers
- #3: Costco is the world’s third-largest retailer, despite only operating about 875 stores around the world.
- $60: The cost of an annual Gold Star membership at Costco as of August 2024
- 128 million: Number of Costco cardholders in 2023.
- $237.7 billion: Net sales for Costco in 2023
- $4.7 billion: Total in membership fees collected by Costco in 2023
FOX Business contributed to this report.