Costco (www.costco.com), as it is known today, was officially founded in 1983 by SDSU alumni James Sinegal. It is the largest membership-only warehouse club and the third largest retailer in the United States and is headquartered in Issaquah, Washington. The company started off under the name “Price Club” in 1976 and was the first mover in the warehouse club industry. They sell a moderate variety of goods in bulk quantities to their customers at competitive prices and have their own store brand, Kirkland Signature, which makes products ranging from clothing, to food, to medicine. Costco stores also often have their own gas stations, car washes, tire centers and optometrists. Their Kirkland Signature brand manages to generate a majority of their profits due to its high mark up in comparison to the name brand products that are offered. I chose Costco because I have been a loyal member for years, and respect them for their fair treatment of their employees and their unique and successful business style. In this short research paper, I will be touching upon a few of Costco’s operations and familiarize myself with the company and its strategies. …show more content…
Costco’s warehouses hold a dual purpose, that is, serving as both the primary store as well as the storage area for their goods. Products are stored above the aisles, making them easy to access for restocking purposes. Costco runs on a “no-frills” basis- they use very simple packaging for their products and showcase their goods on the wooden pallets that they were shipped on, which reduces their inventory costs. With their limited inventory and utilization of early-bird discounts, Costco is able to maintain a higher turnover ratio (11.6x) than Target and Walmart (5.8x and 8.1x, respectively). Another factor that may contribute to their high inventory turnover ratio may be the high quality of their