Costco Financial Analysis Essay

Introduction

The Price Club was Costco’s first location, which opened in 1976. The company started in a converted airplane hangar and started off as a small business. By changing its selected target from business members to families and seeing the potential growth of the business, the small business was transformed into a warehouse industry. The first Costco warehouse was opened in Seattle in 1983. After the success of the warehouse, Price Club and Costos merged together and were first introduced as PriceCostco, but eventually Changed to Costco Companies, Inc. Costco has grown into a successful industry with 848 warehouses located worldwide. Due to the success and growth of Costco, it is one of the top five largest and most popular retailers

Costco earns most of its profit from sales and membership fees. By having a wide variety of goods sold at Costco it has benefited their income. Costco is all about its members, and catering to their needs and wants has allowed it to become profitable. Through membership fees, Costco can increase its annual income by a small percentage. Costco offers three different levels of membership, ranging in price from $60 to $120. The first level of membership is business, which is any business or store with a retail sales license that is qualified for business membership, allowing these customers to shop for resale, personal, or business use. The next level is a gold-star member that allows the member to shop online and in warehouses and includes two free membership cards. The last level is the executive member, who offers many benefits and perks. With executive membership, members receive a 2% annual reward, receive up to $1,000 on Costco travel purchases, shop online and in the warehouse, and receive two additional membership cards. As members of an executive club, you can purchase additional services such as auto insurance, homeowner insurance, long-distance phone services, mortgage services, and discounted business services such as health insurance and merchant credit card

Costco's main target market is middle-to upper-income and educated customers. Costco is catered to those who own jobs, such as management, medicine, finance, law, IT, and government. Costco also targets adults aged ≥ 30 years. Costco appeals to this targeted market by offering various goods. Often, the people entering Costco are adults with families who are looking to find a store to buy everything they need in one store. With the diversity of products, customers are able to buy products in bulk. Through this Costco has been able to grow profitability while growing amongst the population and creating a fan