Costco’s warehouse-like stores may seem like a maze, but that’s all part of the company’s business strategy.

Throughout the history of Costco, the company has remained committed to providing high-quality bulk products at the lowest possible prices. It was able to achieve this goal thanks to its pioneering membership model.

With its “treasure hunt” atmosphere, Costco constantly makes members come back and look for new types of deals, increasing the number of memberships and customer satisfaction.

Low prices were always part of the company’s mission but the discount warehouse club stores didn’t exist until the 1970s.

Our experts at Business2Community gathered the key events from Costco’s history, outlining how it pioneered the membership warehouse concept so you can see how it revolutionized the retail scene.

A History of Costco – Key Dates

  • Jim Sinegal and Jeffrey H. Brotman opened the first Costco warehouse in 1983.
  • Costco went public in 1985, at $10.00 per share.
  • In 1995, Costco launched its private label, Kirkland Signature Brand.
  • Costco had the highest average sales volume per store at $286 million in 2022, overranking its competitors Walmart and Target.
  • As of 2024, Costco has had 873 warehouses in 14 different countries, making it the third-largest retailer in the world.

Who Owns Costco?

Costco is a publicly traded company, belonging to a mix of institutional and individual shareholders. The largest institutional shareholder is Vanguard Group, with 39,875,117.00 shares (~$28 billion), accounting for nearly 9% of the company’s shares. Former CEO Craig Jelinek owns 223,408.00 shares (~$157 million) , making him the largest individual shareholder.

Costco went public in 1985, at $10.00 per share. In 2004, it announced a quarterly cash dividend on the common stock, starting with $0.10 per share. Fast forward to 2024, the company pays a quarterly dividend of $1.02 per share.

For shareholders who held stocks on December 28, 2023, Costco announced a special dividend of $15 per share, payable on January 12, 2024.

When Was Costco Founded?

In 1983, Jim Sinegal and Jeffrey H. Brotman opened the first Costco warehouse in Seattle, Washington. However, the company’s history can be traced back to 1976, when American entrepreneur Sol Price founded Price Club in a converted airplane hangar in San Diego. Pioneer of the membership warehouse clubs, Price Club eventually merged with Costco in 1993.

Sol Price was also the founder of FedMart, a discount department store chain where 18-year-old Jim Sinegal worked as a bagger in 1954. Sinegal continued working for Price as the executive vice president of merchandising, distribution, and marketing of Price Club. He helped the company fine-tune its marketing strategy — in the beginning, Price Club only targeted small businesses with wholesale needs. It then expanded to selected non-business members, marking the growth of the warehouse club industry.

After its launch in 1983, Costco became the first company to grow its sales from zero to $3 billion in less than six years. When Price Club and Costco merged in 1993, they took the name PriceCostco. In 1997, the company started operating under the name Costco Wholesale Corporation.

Who is the Costco CEO?

Ron Vachris is Costco’s CEO and president. Elected by the board of directors, he started his new role on January 1, 2024, as the former CEO Craig Jelinek retired.

The company has only had three CEOs, with co-founder Jim Sinegal serving as CEO for nearly 30 years. Both Jim Sinegal and Craig Jelinek have had high approval ratings throughout their careers, as they focused on employee wellbeing and retention.

In 2009, during Sinegal’s tenure, 86% of Costco employees got healthcare and benefits, and the average hourly salary was $19. Craig Jelinek became Costco’s CEO in 2012.

In 2021, Jelinek made it into Glassdoor’s Top CEOs List, with an employee approval rating of 92%. Jelinek also invested in employee retention, reporting that the company paid benefits and high wages, with an average wage of $25 per hour in 2020.

Costco CEO Name Period
Jim Sinegal 1983-2012
Craig Jelinek 2012-2024
Ron Vachris 2024-present

Stock Price History of Costco

As of January 2024, Costco’s stock price was $687.59 per share. The company has a market cap of $305.10 billion, making it the 28th most valuable company by market cap.

Costco experienced consistent stock increases over the years. According to Nasdaq, the platform where Costco trades its stocks, this is thanks to the company’s business strategy. Costco stores sell high-quality products at low prices and require customers to pay an annual membership fee to benefit from these better prices. As a result, the company gets a high-margin, recurring source of revenue. A $170,000 investment in Costco in 2014 would have resulted in $1 million in 2024.

In 2023, Costco stock increased by 39%, reaching $667 per share. Its all-time high stock closing price was $694.97, recorded on January 19, 2024, but that will likely change soon. It has reached new all time highs multiple times in January alone.

costco share price chart

Growth and Development of Costco

Costco is known for offering low prices on bulk quantities. With its membership warehouse model and its private label products, it appeals to both small businesses and retail customers. According to former CEO Craig Jelinek, Costco is able to maintain lower prices by eliminating the “frills and costs” such as fancy buildings, salespeople, and extra services.

Here are the key dates for the company’s growth, global expansion, and membership offerings.

1983-1994: Costco Opens Its First Warehouse In Seattle

The first Costco warehouse opened on 4th Avenue S in Seattle. Its warehouse concept was pioneered by Price Club, where small businesses got discounts.

Costco offered small business owners an 8-9% discount on various products, including food, tires, and cosmetics, in return for an annual membership fee of $25-35. Later on, the company started offering its membership plans to retail customers and non-business members.

In 1985, Costco went public at $10.00 per share. Eight years later, it merged with Price Club, changing its name to PriceCostco. The merged company had 206 locations making $16 billion in annual sales. Changing its name didn’t change the company’s philosophy:

Keep costs down and pass the savings on to our members.

Costco opened its first store in Canada in 1985, starting its global expansion. In 1992, the company expanded further with its Mexico City store launch. Although many thought it wouldn’t be so popular, Costco had six outlets in Mexico by 1994.

One of the company’s iconic products, the Costco hot dog, started in its Seattle store in 1985. It has become famous for its steady price: $1,50 for a combo of hot dog and soda in Costco’s food court. Years later, the company’s Chief Financial Officer Richard Galanti announced that the company aimed to keep the price at $1,50 forever. The $1.50 combo has since become a valuable publicity tool and a major draw for families looking for a quick, and ultra-cheap meal.

1995-2000: Costco Introduces the Kirkland Signature Brand

In 1995, amidst the rising prices of brand-name products, Costco decided to develop its own brand: Kirkland Signature Brand. It designed the brand to be equal to or better quality than national brands, while maintaining lower prices. The name Kirkland came from the city of Kirkland, where Costco’s headquarters were based at the time. Shortly after Kirkland’s launch, Costco moved its headquarters to Issaquah.

Kirkland Signature brand has been selling a wide range of products, including clothing, groceries, health and beauty, cleaning items, and organic food, all exclusive to Costco stores.

In 1997, PriceCostco resumed using the Costco name, with the remaining Price Club locations adopting the Costco rebrand. A year later, it launched its ecommerce store, costco.com. In 1999, Costco changed its corporate name from Costco Companies Inc. to Costco Wholesale Corporation.

Photo showing a Costco store - Pixabay

2000-2010: Costco Offers Additional Services

In addition to its warehouses and ecommerce store, Costco increased its services to offer travel, pharmacy, direct-to-consumer, and same-day delivery deals to its members.

Costco Service Name Launch Date Offerings 
Costco Travel 2000 Rental cars, cruises, and hotel reservations
Life Insurance with Protective Live 2014 Life insurance
Costco Next 2017 Direct-to-consumer program with limited-time deals
Costco Grocery 2017 Same-day delivery and two-day delivery

Although it started providing additional services, Costco continued selecting its warehouse products carefully. The average Costco warehouse stocks 3,700 products at any given time, which is less than one-tenth of most supermarkets.

2010-2020: Costco Continues Growing

Jim Sinegal noted that Costco’s ecommerce business had been profitable since its launch in 1998. In five years, from 2014 to 2019, Costco’s ecommerce sales doubled. In 2023, it made over $10 million in net sales from ecommerce only.

Chart showing e-commerce net sales of costco.com from 2014 to 2023

Craig Jelinek became Costco’s CEO in 2012, upholding the Costco co-founders’ values: offering high wages to employees and keeping product prices as low as possible. During Jelinek’s tenure, Costco expanded into new markets, including France, Spain, Iceland, and China.

Unlike other Western retailers such as Home Depot and Carrefour, Costco experienced immediate popularity in China ever since it first opened in 2019. Customers waited three hours to get a parking spot and stayed in line for hours. According to retail analysts, this was thanks to Costco’s ability to bring a new and exciting concept to the Chinese market.

Costco also strategically introduced its Kirkland signature products through a Chinese ecommerce site five years before the store launch, familiarizing the consumers with its products.

2020-Present: Costco Wholesale Corporation Has Over 800 Warehouses

As of 2024, Costco had 873 warehouses, operating in 14 territories in North America, Asia, Europe, and Australasia. Nearly 600 of these Costco warehouses are located in the United States and Puerto Rico, over 100 in Canada, and 40 in Mexico.

Chart showing the number of Costco warehouses around the world

The company has 129.5 million members who pay the annual membership fee. In Q1 of 2024, the company’s membership income increased 8.2% year-over-year. 90.5% of Costco members renewed their membership plan in 2024, suggesting they found value in the deals offered by Costco Wholesale.

Costco made it into Forbes’ Best Employers List in 2023. Employing 206,000 full and part-time employees in the US and 316,000 employees worldwide, Costco offers health benefits including medical, dental, and vision, in addition to competitive salaries, employee development programs, and paid internships.

According to the National Retail Federation, Costco is the third largest retailer in the US, having made $164.15 billion worth of retail sales in 2022. It only ranks below Walmart, the world’s largest retailer with $600.94 in retail sales, and Amazon, the second largest retailer with $343.33 billion in sales.

Costco is one of the three mass market brick-and-mortar retailers in the US, along with Walmart and Target. In 2022, it had the highest average sales volume per store at $286 million, outranking its competitors.

Costco Membership Fees

Costco has three membership plans: executive, business, and gold star. Business members can purchase for resale, but they must provide Costco with the appropriate resale information.

All the memberships include a free Household Card and are valid in all Costco locations around the world. The Executive Membership offers an annual 2% reward on qualified purchases, capped at $1,000 for a 12-month period.

Membership Type Annual Membership Fee
Executive Membership $120
Business Membership $60
Gold Star Membership $60

According to co-founder Jim Sinegal, Costco’s membership model develops with loyalty. “If the members are shopping intelligently, they’re going to wind up saving the membership fee in one trip,” he said in an interview at Georgetown University.

To get a Costco membership, shoppers have three options:

  1. Visiting the membership desk at a Costco warehouse to join in person
  2. Signing up online on Costco’s website
  3. Calling 1-800-774-2678 to speak to Member Services on the phone.

Photo showing a Costco Wholesale store from the outside - Pixabay

Before Jim Sinegal and Jeffrey H. Brotman started Costco, there was Price Club, the first discounted warehouse club company. Price Club’s logo was black, written in block capitals. When Costco opened its first store in 1983, it picked an attention-grabbing red logo.

Both companies adjusted their logos during the 1993 merger of Price Club and Costco: Price Club adopted a blue color, and Costco changed its font to block capitals, underlining its name with a blue line. This was the start of the combined company, PriceCostco.

In 1997, PriceCostco changed its name to Costco Wholesale and adjusted its logo to reflect the change. Below is a video showing how the company’s logo has evolved from the Price Club logo in 1976 to the 1997 logo that is still used today:

The Future of Costco

According to analysts, Costco will be in a good position in the stock market in the future, thanks to its high value, renewal rates, and club expansion plans.

The Motley Fool’s stock experts predict Costco’s memberships to continuously increase, and reach 165 million by 2028. Given that the company opens 20 to 25 stores per year, it is expected to have 960 stores by 2028.

In 2024, the company announced several future store openings, namely in China and the US.

By focusing on the people within the business, keeping a tight rein on the products on its shelves, and taking time to develop offerings in global markets, the future of Costco is secure.

Wrapping Up

Costco’s legacy as a retail giant is a testament to its commitment to providing high-quality products at unbeatable prices.

From its humble beginnings in 1983 to its current status as the third-largest retailer globally, Costco’s membership model has reshaped the retail landscape.

Under the leadership of CEO Ron Vachris, Costco continues to prioritize employee welfare and customer satisfaction, ensuring its continued success and growth in the years to come.

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