Costco operates on a membership only basis, therefore customers and businesses must purchase a membership to shop at the retailer. Costco currently has two memberships available, which are their individual membership, also known as Gold Star, and their Business membership, both of which cost $55 annually (10-K, 2015). For $110, a customer can upgrade to an executive membership, where they can enjoy a 2% discount (SWOT, 2015). They currently have around 75 million members, and due to their no-frills approach, low prices, and high quality products they have a high member retention rate of 91% in the U.S. and Canada, and an international rate of 87% (Forbes, 2016).
Costco has been steadily growing and their net sales increased from $75,255 million in 2010 to $110,212 million in 2014 (SWOT, 2015). Because they have minimized costs due to their efficient organizational model, they have also been able to lower labor costs. They participate in very little marketing and have cut out many redundancies in their freight shipping process. This has resulted in a hefty increase in their cash from $4,644 million in 2013 to $5,739 million in 2014 (SWOT, 2015). Costco is currently being traded at a high of $149 per share (NASDAQ, 2016). This has allowed Costco to have the freedom to focus on growing and improving.
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Their online sales were $3.5 billion in 2015, which is a 20% increase from 2014, and they are hoping to continue to grow their online presence (Great Speculations, 2015). They have also been working to produce more private label products, such as their brand Kirkland Signature, which are high quality products available at an affordable price. Customer demand for private label brands has increased recently, so Costco plans for private labels to make up 30% of their merchandise in the next few years (Trefis,