You think you know Costco? Think again! Welcome to WatchMojo, and today we're counting down the top 20 things you might not know about this giant multinational corporation known for its membership-only warehouse clubs.
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00:00I feed seven every night. It makes it real easy to get the volume of food I need.
00:06Welcome to WatchMojo, and today we're counting down interesting and little-known facts about this giant multinational corporation.
00:13Hi, Joe.
00:19Number 20. The Costco Connection has a massive circulation.
00:22The monthly magazine, The Costco Connection, boasts a circulation that rivals some of the biggest publications in the United States,
00:28reaching over 14 million households and businesses in the U.S. alone.
00:32With editions in several countries, including Canada, the United Kingdom, Taiwan, Korea, Japan, Australia, and Mexico,
00:39it offers a mix of lifestyle and business articles, vendor stories, and member highlights,
00:44tailored to reflect the interests and needs of members in each locale.
00:47Far from being just a catalog, it's become a key way for Costco to maintain a unique relationship with its members,
00:53offering more than just sales pitches, but a sense of community and shared values.
00:57Number 19. The first store was a converted airplane hangar.
01:01What is today called Costco actually grew out of a merger of two retailers with similar business models.
01:08Unlike with some other big-name companies, the history of Costco isn't a tale that's been drilled into the public consciousness.
01:14The earliest iteration of this business, Price Club, opened in 1976 and was the first store of its kind.
01:20The initial concept was to cater to small businesses, but the creators quickly realized
01:24that they could increase their profits exponentially by serving the general public as well.
01:28The Price Club philosophy is simple and blindingly obvious.
01:32Sell the widest possible range of items at the lowest possible price in a basic, bare-bones, low-cost environment.
01:39The first store was located on Marina Boulevard in San Diego, California,
01:43in buildings that previously functioned as an airplane hangar.
01:46Stores today continue to be modeled in the same fashion, albeit in traditional warehouses, without the high-flying legacy.
01:52Price Club and Costco merged in 1993 and were initially named Price Costco.
01:58The company became just Costco in 1997.
02:02Number 18. Kirkland products are named after a real place.
02:06Well, I got plenty of choices. Just made my weekly run to Costco.
02:11Tropical mango, dragon fruit, strawberry mango fever. That's brand new.
02:19It's not some random focus group corporate name.
02:22The Kirkland Signature brand, Costco's in-house label, draws its name from the city of Kirkland, Washington,
02:27where Costco's first headquarters were situated.
02:30Introduced in 1995, this brand emerged with the goal of delivering products
02:34that matched or exceeded the quality of national brands, but at more affordable prices.
02:39The choice of Kirkland as the brand name pays homage to Costco's origins
02:43and underscores the company's deep roots in the local community.
02:46It was the original home to the Seattle Seahawks, as well as Costco's first headquarters, hence the brand name Kirkland.
02:52The success of the Kirkland Signature brand reflects Costco's ability to leverage its massive buying power
02:57to secure favorable deals from suppliers, which in turn benefits its members.
03:02The sheer range of products is astonishing.
03:05There are Kirkland diapers and Kirkland bottled waters, of course, but there are also Kirkland wines and liquors.
03:11Number 17. The hot dog combo hasn't changed price since 1985.
03:15The beloved $1.50 hot dog soda combo has cost the same since 1985,
03:21and that is welcome news to inflation-weary customers.
03:24Hungry while shopping? Costco has a plan for that.
03:27The chain's famous hot dog and soda combo has remained $1.50 since its introduction in 1985.
03:33Despite inflation and rising costs, Costco has maintained this price,
03:37reflecting a commitment to value for its members.
03:39The hot dog stand, more than just a part of the food court,
03:42illustrates Costco's approach to balancing cost and member benefits.
03:46This decision to keep the price unchanged over decades is a notable aspect of Costco's strategy,
03:51highlighting a focus on affordability and consistency.
03:54It underscores the retailer's effort to offer value,
03:56while also drawing attention to the challenges of sustaining such pricing policies in the face of economic changes.
04:08Number 16. It's one of the largest pizza chains in the U.S.
04:12If you think Costco has good pizza, you should shop at Costco.
04:14I'm not putting people down. Costco, bulk, wholesale, save money.
04:19This saves money pizza.
04:21And it's not just hot dogs.
04:22Surprisingly, Costco is ranked as one of the largest pizza chains in the United States,
04:26outpacing many well-known brands in terms of the volume of pizza sold.
04:30This success is attributed to generous portion sizes, competitive pricing,
04:35and the convenience of grabbing a quick, tasty meal while shopping.
04:38Costco's approach to pizza sales emphasizes value and accessibility,
04:41making it a go-to option for families and individuals alike.
04:45The pizza's reputation for being both delicious and affordable
04:48has definitely contributed to its standing as a formidable player in the U.S. pizza market,
04:52demonstrating Costco's unique position in the food service industry.
04:56Us two kids, Costco is a regular thing probably twice a week for me and my wife.
05:00My daughter is a pepperoni pizza loyalist.
05:02Number 15. It built a poultry complex.
05:05Last year, Costco sold 137 million rotisserie chickens globally,
05:10more than Mexico's population.
05:12To ensure a steady supply of chicken for their rotisserie chickens,
05:15which are famously priced at just $4.99,
05:18Costco built its own poultry complex in Nebraska.
05:21This move into vertical integration allows Costco to control costs,
05:25highlighting their commitment to supply chain control.
05:27By managing the production process from feed to finished product,
05:31Costco can mitigate the impact of market fluctuations on supply.
05:34This strategic investment not only secures a consistent supply of poultry for their stores,
05:39but also reflects Costco's broader strategy to manage key aspects of their supply chain internally.
05:44It's important to note that Costco has been accused of violating animal welfare laws
05:48in raising its chickens, including in a shareholder lawsuit filed in 2022.
05:52This commitment to low prices hasn't just kept customers loyal,
05:56it has also helped spread the brand.
05:58Number 14. It's considered a quality employer.
06:01I really like the other employees.
06:03I got a good group of people there and I really liked everybody that worked there.
06:08It was a good environment. I definitely recommend it for anybody.
06:11Costco stands out in the retail industry for its relative commitment to employee welfare,
06:16offering some of the better wages, benefits, and working conditions in the sector.
06:20Seeming to recognize that happier employees are crucial to providing high-quality customer service,
06:24Costco offers competitive salaries, comprehensive health benefits,
06:27retirement options, and opportunities for career advancement.
06:30This investment in its workforce has not only led to lower employee turnover rates,
06:34but also fostered a positive and productive work environment.
06:37Costco's approach to employee management is often held up as a model for the retail industry,
06:42demonstrating that prioritizing employee satisfaction
06:45can lead to greater business success and customer loyalty.
06:48Costco store employees make better wages than those at many other retailers.
06:52The company justifies the better pay and benefits for workers
06:55on the grounds that happier employees will be more helpful to members
06:59and improve the shopping experience.
07:01Number 13. It dominates the organic products market.
07:04At the request of our members, we've actually added more organic products to some of these departments.
07:08Costco offers a variety of prepared meals.
07:11In fact, these are made here fresh from our deli.
07:13Contrary to what some might expect,
07:15Costco has emerged as one of the largest sellers of organic products,
07:18outpacing specialty retailers like Whole Foods.
07:21The company's commitment to offering a wide variety of organic options at competitive prices
07:26reflects its responsiveness to consumer trends
07:28and addressing demands for healthier, more sustainable food choices.
07:31Again, unsurprisingly, Costco's success in the organic market
07:35is attributed to its ability to leverage its buying power
07:38to secure favorable deals from suppliers,
07:40passing on some of the savings to its members.
07:42This emphasis on organic products
07:44not only caters to the growing consumer preference for organic foods,
07:48but also aligns with Costco's broader aspirations to sustainability and quality.
07:52When you go into the store, it doesn't feel the same as the last time you were there.
07:56So you have a sense of urgency about purchasing
07:58and also just a sense of wanting to come back and check out what's going on.
08:02If it was the same every time, you might not come as often.
08:04Number 12. The impact of the membership model.
08:07Whether you do your shopping weekly or monthly,
08:10if you're a college student, a business owner,
08:12you have a large family, or you're a pet parent,
08:14you are sure to benefit from an executive membership with an annual 2% reward.
08:18Costco's membership model was a revolutionary concept
08:21that transformed the retail landscape.
08:23By requiring customers to purchase memberships to shop in their warehouses,
08:27Costco created a sense of exclusivity and loyalty
08:30that has been integral to its success.
08:32This model allows Costco to keep prices low
08:34by operating at a lower overhead compared to traditional retailers
08:38and focusing on a curated selection of high-volume, high-value items.
08:42And there you have it. A license to shop till you drop.
08:45The membership model has not only fueled Costco's growth,
08:48but also fostered a strong community of dedicated shoppers
08:51who crave the value and quality that Costco is seen as offering.
08:54This innovative approach to retail proved to be a game changer,
08:58setting Costco apart from its competitors
09:00and establishing it as an early leader in the now competitive warehouse club sector.
09:04It sold $4.6 billion worth of memberships last year.
09:09So their whole goal is to make sure that membership is valuable,
09:13that people can't do what we call in business free riding.
09:16Number 11. It takes book selection seriously.
09:19It's not a grocery store. It's not a small corner store.
09:22It's huge, it's cavernous, the ceiling is high.
09:25Want something good to read as you enjoy some pizza or hot dogs?
09:28Costco's book section might come as a surprise to those
09:31who view it merely as a destination for bulk goods.
09:33This section offers a curated collection of current bestsellers,
09:36children's books, cookbooks, and more.
09:38Often at discounted prices.
09:40Costco's approach to book retailing is geared towards members
09:43discovering new reads and gift ideas while shopping for their everyday needs.
09:47The book selection process emphasizes recent popular and critically acclaimed titles,
09:51making it easier for browsing customers to find higher quality reads
09:55without needing to sift through an overwhelming amount of options.
09:58Number 10. It's a travel booking giant.
10:00As an executive member, you in fact earn 2% cash back when you book through Costco Travel.
10:05Beyond its vast selection of goods, Costco has quietly positioned itself
10:08as a powerhouse in the travel industry through its Costco Travel services.
10:12Offering exclusive travel deals to its members,
10:15Costco Travel provides significant savings on vacation packages,
10:18cruises, rental cars, and more.
10:20Another instance of market domination yielding potential savings,
10:23members can choose package deals that often include added perks,
10:27such as resort credits and room upgrades.
10:29The focus is largely on making luxury travel more accessible.
10:33The success of Costco Travel underscores the company's ability
10:36to leverage its buying power across different industries,
10:39further enhancing the value of a Costco membership.
10:42Book a cruise, rental car, or a dream vacation package,
10:46whether it's a family-friendly theme park or a beachside hotel.
10:49Number 9. It's also a leader in the wine industry.
10:52Here we have an amazing selection of our beer, wine, and spirits.
10:55Wow, I didn't know you guys had this big of a selection.
10:58While Costco doesn't sell alcohol in all countries where it operates,
11:01Costco has, incredibly, become the largest wine retailer in the United States.
11:05It sends wine buyers to travel the world looking for quality deals
11:09as the company's strategy focuses on a curated selection of high-quality wines
11:13at competitive prices, ranging from affordable bottles to more high-end vintages.
11:17Today, she heads a team of 17 domestic and international wine buyers
11:22and is involved in every detail of the business.
11:25I think it's too light, huh?
11:27Of course, wine snobs or status seekers turn up their noses,
11:30but this lucrative focus on wine retailing has not only democratized access to quality wines,
11:35but also educated consumers, making Costco an actual destination
11:39for a large population of wine enthusiasts.
11:42And Costco, famous for televisions, tires, and tuna fish,
11:46just happens to sell more wine than almost any retailer in the world.
11:50Number 8. The strategic role of its free sample program.
11:54I will seriously consider purchasing this product.
11:58Oh, what have we here? May I partake? Mmm!
12:03Everybody loves free stuff, but Costco's free sample program
12:06is more than just a popular perk for shoppers.
12:08It plays a strategic role in the company's marketing and sales strategies.
12:12By offering samples of products throughout the store,
12:14Costco not only enhances the shopping experience,
12:17but also directly influences purchasing decisions.
12:19No opportunity is lost to push products.
12:22At times, the place looks and sounds more like a street market.
12:25We have vital flaws. This will do an excellent job.
12:28Beyond driving sales, the free sample program serves as a valuable feedback mechanism
12:33for Costco and its suppliers.
12:35Sampling provides immediate consumer reactions to new products,
12:38which can inform inventory decisions and supplier adjustments.
12:42This direct interaction between customers and products
12:45helps Costco maintain a dynamic and responsive product offering
12:48that aligns with emerging trends.
12:50All the ingredients in one.
12:52The king!
12:53This is it. It's organic. It's a great activity for kids.
12:56Oh, I've got two boys at home that will go wild for this!
13:00Number seven, the power of the $4.99 rotisserie chicken.
13:03The cluck stops here.
13:05We already discussed the controversial infrastructure behind poultry processing,
13:08but it's important to discuss the actual product that demanded such an intensive investment.
13:12The $4.99 rotisserie chicken, like a $1.50 hot dog,
13:16is more than just a popular product.
13:18Costco is among the world's biggest purveyors of meat,
13:22selling $4.5 billion worth a year.
13:25It's an item that exemplifies Costco's business strategy.
13:28Despite inflation and rising costs,
13:30Costco has maintained the price of its rotisserie chickens for years,
13:34using it as a loss leader to drive traffic and membership loyalty.
13:38The decision to keep the price stable, even at a loss,
13:41underscores how the concept of getting a great deal
13:43has become synonymous with Costco's brand,
13:45even if the extreme discount on rotisserie chickens
13:48is quite different from the pricing on other products.
13:51Number six, private jets.
14:03In January 2021, Costco entered a unique partnership with Wheels Up,
14:07a private aviation company,
14:09offering its members an exclusive one-year private jet membership,
14:12costing over $17,000.
14:14This membership aimed to make private flying more accessible,
14:17featuring benefits such as a $3,500 Costco shop card
14:21and $4,000 in flight credits.
14:23Members could book flights with Wheels Up fleet of over 300 planes
14:27and access to more than 1,250 partner aircraft.
14:30The membership also included additional perks,
14:33like a one-year Inspirato luxury vacation rental subscription.
14:36However, the membership fee did not cover the actual flight costs,
14:40emphasizing a pay-as-you-go model for booking flights.
14:43Knowledge is power in our space.
14:45I think the more people understand what private aviation is,
14:48the more it's going to come our way.
14:49People like a membership program versus whole airplane ownership.
14:52Number five, quality over quantity.
14:55There's a psychology to finding a deal that's very satisfying for people.
14:59And people enjoy the product selection at Costco.
15:02Sometimes, less can be more,
15:04at least according to the strategic planners
15:06who developed Costco's business philosophy.
15:08The company's strategic product selection process,
15:11characterized by a limited number of products,
15:13is designed to simplify shopping and enhance value.
15:16By offering a curated selection of higher-quality items in bulk quantities,
15:20Costco ensures that members have access
15:22to a selected basket of products that streamlines the shopping experience.
15:26But those products are very carefully chosen.
15:29In many ways, Costco was a pioneer
15:31in the now common practice of collecting and analyzing customer data.
15:35But crucially for Costco's profitability,
15:37this approach also strengthens Costco's negotiating power with suppliers,
15:41allowing for significant cost savings that are passed on to members.
15:44The company's focus on quality over quantity
15:47distinguishes it from most competitors.
15:49One ketchup, one choice.
15:51You don't have to choose from a variety of other ones.
15:54You've literally paid them to do that for you.
15:58Yes, they've edited it down.
15:59Number four, return policy.
16:01It's a laptop.
16:02Uh-huh.
16:03Is it from Chris?
16:04Yes.
16:05And you're Brett?
16:06Those are two of my coworkers.
16:07Okay.
16:08And the laptop's causing us problems.
16:10All right.
16:11And it's a $1,500 item?
16:12Correct.
16:13Costco's return policy is legendary among retailers for its simplicity.
16:17Members can return almost any product at any time if they are not satisfied,
16:21a policy that underscores Costco's commitment to customer satisfaction and trust.
16:25This hassle-free return policy builds loyalty and confidence among members,
16:30reinforcing the perception of Costco as a retailer
16:33that stands behind the quality of its products.
16:35While such a liberal return policy could be seen as risky,
16:38Costco's experience shows that it engenders member loyalty,
16:41which in turn drives repeat business and positive word of mouth.
16:45The lady returned a Christmas tree to Costco and got a full refund for it.
16:51Last week she did it in January after Christmas.
16:54Number three, it's all about rotation.
16:56What Costco does is it really understands their consumer,
17:00understanding what's going to excite them,
17:03and then making sure you have the product that's going to be there to excite them.
17:06Another important inventory strategy that Costco implements
17:09is a dynamic rotation of products, especially when it comes to seasonal goods.
17:13This approach ensures that the warehouses are always stocked with fresh, timely items.
17:18This strategic rotation not only keeps the shopping experience exciting and varied,
17:22but also allows Costco to manage its inventory efficiently,
17:25minimizing waste and optimizing sales.
17:28But here's the potential downside.
17:30It also means that because of the ruthless focus on limited selection,
17:34if you miss out on something that you really want that isn't perceived to be in season,
17:37you have to wait until next year if it's restocked at all.
17:40There's a pretty good chance that many of the items a shopper sees on Costco shelves
17:44might not be there in a month or two.
17:46The rotating stock encourages impulse buying.
17:49Each visit to the store can yield a surprise for a member.
17:52Number two, global expansion and local adaptation.
17:55Well, I was very surprised at how popular Costco is in the Far East.
18:00You know, people had said to me, you know, Costco won't succeed in the Far East.
18:04You know, the apartments are small.
18:06They can't buy in bulk.
18:08And the fact is, they figure out how to use Costco.
18:10The company's approach to global expansion reflects its capacity
18:14to adjust to different market environments
18:16while preserving the essence of its business model.
18:18Operating warehouses in countries such as Mexico, Japan, South Korea, and Australia,
18:23the company customizes its inventory to align with the local tastes and preferences,
18:27indicating an understanding of varied consumer behaviors across regions.
18:31This strategy of localization has facilitated Costco's entry into markets
18:35that have diverse cultural and economic characteristics.
18:38In doing so, Costco's presence in international locations
18:41often introduces the concept of warehouse shopping to new demographics.
18:46Analysts say Costco is more profitable outside the U.S. than inside of it.
18:50Part of that just might be domestic competition.
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19:09Number 1. Checking In
19:11But it has managed to find a new recipe for one of the oldest enterprises in human history.
19:17Selling Stuff
19:19Costco's policy of checking receipts at the exit
19:22can sometimes lead to feelings of inconvenience or hassle among customers.
19:26This practice, aimed at ensuring the accuracy of transactions
19:29and preventing loss through theft or cashier errors,
19:32involves a staff member reviewing the items in a shopper's cart against a receipt.
19:36I don't ever think I leave without spending a couple hundred dollars easily.
19:40So I save all sorts of money, but I spend a ton of money too.
19:43While intended as a security measure and a way to keep costs down by minimizing losses,
19:47some shoppers question its necessity, feeling it implies a lack of trust.
19:51The procedure, though quick, can cause delays during peak shopping times, adding to the frustration.
19:56This aspect of Costco's operational strategy, while practical from a business standpoint,
20:00sparks mixed reactions from its members,
20:02with some accepting it as part of the shopping experience
20:05and others viewing it as an unwelcome scrutiny.
20:07Welcome to Costco. I love you.
20:10Welcome to Costco. I love you.
20:13What do you like or dislike about Costco?
20:16Let us know in the comments.
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