Lessons for BAMers from Costco

Most North Americans have heard of the big box warehouse store, COSTCO, and so have others in another dozen countries. The membership-only club has 125 million members, 900 warehouses, and 316,000 employees worldwide. It has grown since its first warehouse in Seattle, WA was started by Jeff Brotman and Jim Sinegal in 1983, and is now the third-largest retailer in the world (based on global sales).

I have been a member of Costco since 1993 and calculated that I have saved hundreds of dollars over the years, mostly from its cheap gasoline prices. What is it about its amazing success that we can reflect upon as we build a BAM business?

  1. The customer is first with a value proposition, which makes the membership price easily recovered with the savings on everyday necessities. They focus on a narrow selection of products in a wide range of categories and provide savings over its competitors by keeping the cost of all regular items valued at no more than 14% over cost. The quality of Kirkland Signature items is universally revered.
  2. Doing something for the community includes helping people make ends meet, helping small businesses run their businesses by making prices low enough to be re-sold for a good profit margin, and by creating jobs and career opportunities.
  3. Costco is known for its adaptability to each community. Warehouse buildings are built in places and ways to best serve the community. As far as what’s inside, each country features items specific to that region, so geoduck and wild black tiger prawns are available in China. South Korean warehouses have sea squirt, and of course New Zealand has feijoa and a metal kiwi bird sculpture.
  4. Employees are well cared for. Costco CEO, Craig Jelinek, mentions that the consistent company culture is “…to ensure that all employees worldwide are invested in its business goals.” He further affirms that Costo values, ethics and merchandising strategies are crucial. “We pay good wages and benefits across the board, but beyond that we pay attention to other’s needs, like how our employees are managed, developed, and treated.
  5. The company is highly profitable. Revenue for 2023 was $242,290 million and net income last year was $6,292 million.

Larry W. Sharp, BAM Support Specialist, IBEC Ventures

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