Why Costco Is So Damn Addictive

Jessica McIntoshZhengyuan Jiang

Costco's Warehouses

• The fourth-largest retailer in the country• seventh-largest in the world• $59 billion in sales• 488 warehouse locations • No.28 in the FORTUNE 500

Members of Costco• 48 million members

– averaging 22 trips a year

• many affluent members– incomes over $75,000

• $55 per year for households

• $110 per year for small businesses

Products• Costco

– 3,000 regular items

– 1,000 items that always changing

• Wal-mart supercenter– 150,000 items

Mr. Sinegal's cardinal rules

• Costco– Branded items mark-up 14% – Private-label items mark-up

15%• Supermarkets

– 25% mark-ups• Department stores

– 50% or higher mark-ups

To be Costco's Employees

• $17 an hour (42 percent higher than its fiercest rival, Sam's Club)

• Costco's health plan (makes those at many other retailers look Scroogish).

• "It's better to be an employee or a customer than a shareholder."--Bill Dreher of Deutsche Bank

Managers of Costco

"Our managers are entrepreneurs, not somebody who just comes in and unlocks the doors." Indeed, with some locations doing upwards of $300 million in sales a year,each ware-

house is a mini-corporation, and each manager a de facto CEO."

--Costco CEO Jim Sinegal

Thanks for watching !!

Sources

• Why Costco is so Damn Addictive– http://www.wou.edu/~eltonm/Marketing%20Strategy/

• How Costco became the Anti-Wal-Mart– http://www.nytimes.com/2005/07/17/business/

yourmoney/17costco.html?pagewanted=all

• Costco raises membership fees; profit misses view– http://www.reuters.com/article/2011/10/05/us-

costco-idUSTRE7942D620111005