The pair reached an agreement, scraped together US$7.5 million from investors to back the start-up and in 1983 nervously opened the first Costco, in an industrial area in south Seattle. According to a popular story among company longtimers, the store’s first employees were told to park their cars in the customer lots to make the place look busy.

But the business survived, grew to 10 warehouses within a couple of years and, in an ambitious and complex move, merged with its competitor, Price Club, in 1993, creating a company with almost 200 warehouses and 43,000 employees. Along the way, it helped drive revolutions in the way products are manufactured, distributed, marketed and sold.

According to Costco’s 2022 annual report, its revenue was US$222.7 billion. It operates more than 855 warehouses around the world—including 107 in Canada—with 304,000 employees and 123 million members worldwide, making it the third-largest retailer in the world (based on global sales).

Going international

In planning Costco’s international expansion, some were worried that the concept of paying for a membership to buy items in bulk might get lost in translation. Giant tubs of peanut butter, a lifetime supply of toilet paper and the means to transport and store such items are typically American, after all. But the truth is, whether you live in Toronto, Sydney, or Seattle, the value proposition is the same: A Costco membership is worth the savings on everyday necessities and wow items. Plus, the Food Court’s hot dog and soda combo translates to “a steal” (yep, it’s about a buck-fifty around the world) no matter which language you speak.

This shared philosophy is what has led to Costco’s well-known strategies: keeping markup to no more than 14% over cost; providing a money-back guarantee on most products and membership fees; focusing on a narrow selection of products in a wide range of categories; proceeding with steady, but cautious, growth; and never selling seconds or inferior goods.

The company philosophy is more than just a business plan, comments Mike Sinegal, Jim’s son, who helped establish Costco in Japan and initiated efforts to launch operations in Europe.

“I think my dad’s perspective is that by bringing value to people, we’re actually doing something good for the community,” says Mike. “Helping people make ends meet, helping business owners run their businesses … and supporting business owners so their businesses can succeed—all this is healthy for the community.”

Expanding warehouse operations began in Canada in 1985 and in Mexico in 1992. Today, you can also find Costco in Japan, South Korea, Taiwan, the United Kingdom, Australia, New Zealand, Spain, France, Iceland, Sweden and mainland China.

Growth mindset

“As a company, we are now 40 years old. We still view ourselves as a growth company,” says Craig Jelinek, Costco’s president and CEO. “There are a lot of opportunities in the US, Canada and Mexico. But we see exciting growth opportunities outside of North America, both in existing markets and potential new markets where our model would be successful.”

As for what’s inside the warehouses, each country features items specific to that part of the world—mostly foods that cater to local taste preferences. The remaining goods comprise many of the same nonfood items you’d see in a Canadian Costco. And, Kirkland Signature™ items are universally revered for their quality and value.

In addition to warehouses, Costco also has international e-commerce sites in many countries where it does business, such as Costco.ca in Canada.

Jelinek says that no matter where Costco puts down roots, it’s important to maintain a consistent company culture to ensure that all 304,000 employees worldwide are invested in its business goals. He says that reiterating Costco’s history, values, ethics and merchandising strategies is crucial to overseas success. “We don’t take it for granted,” he says. “We pay good wages and benefits across the board, but beyond that, we pay attention to other needs, like how our employees are managed, developed and treated.”