A wave of warehouse club retailers spread through the United States in the 1970s and 1980s. Although it wasn’t the first warehouse retail chain store, Costco is the most successful proponent of this business model. The brand has come a long way from its humble beginnings in a Kirkland warehouse forty years ago.
Today, the company’s mission is ‘to continually provide our members with quality goods and services at the lowest possible prices.’ The statement stresses that the company’s purpose is to serve its clients by giving them access to affordable services and goods.
In addition, it indicates the company’s aim to maintain and improve its position in the global retail market. So, in this article, I’m going to go through all aspects of Costco mission statement and see what they reveal about the company’s culture.
|Name||Costco Wholesale Corporation|
|Founded||September 15, 1983|
|Headquarters||Issaquah, Washington State|
|Market cap||241.62 billion|
Costco Mission Statement – In-Depth Analysis
Although its story began on September 15, 1983, the defining moment in Costco’s history was the merger with the Price Club in 1993. Jim Sinegal, one of Costco’s founders, was working at FedMart, a chain discount department store founded by Sol Price, who also started the Price Club in 1976.
Sam Price rejected Walmart‘s offer to merge Price Club with Sam’s Club and instead opted to join forces with his former employee. After the merger, the newly formed PriceCostco had 206 warehouses across the US.
Today, Costco is among the largest retail companies in the world, with 834 warehouses in ten countries and 115 million members. The retailer’s mission focuses on the following aspects of its operations:
- Low pricing
- Product and service quality
- Keeping control over the wholesale club market
Costco generates a significant percentage of its profits through online sales as its online platform attracts millions of daily visitors.
High-Quality Products at Affordable Prices
It’s hard to imagine a product Costco warehouses don’t have. Still, the retailer’s product selection isn’t as comprehensive as in supermarkets or superstores. The brand offers products from the following categories:
- Sporting goods
- Car supplies
- Health and beauty products
- Office equipment
- Apparel and accessories
Costco stores feature products made by the world’s leading brands, including:
- Oral B
The brand offers discounts for the Kirkland Signature line, which consists of private-label products. On average, a Costco warehouse has around 4,000 types of products at all times, while Walmart has over 100,000 stock-keeping units.
The sizes of Costco’s warehouses vary from 80,000 to 230,000sq/ft, and they’re often accompanied by gas stations and pharmacies. Although you don’t have to be a club member to shop at Costco, getting one of the retailer’s memberships grants you access to all store’s departments.
Currently, the brand offers Gold Star, Business, and Executive memberships that provide members with a double guarantee and enable them to use the Costco Travel platform.
Serving the Customer in the Best Way Possible
The brand’s mission statement highlights its determination to provide the best service to its members. Still, you can shop at the following Costco departments without a membership:
- Optical services
- Food court
Hence, the range of products non-members can purchase at Costco is limited and the retailer doesn’t offer one-day passes or free trials. Using the online store is also an option, but all non-members have to pay a 5% checkout fee, and most products are significantly more expensive than in the warehouses.
Holders of Costco Gold Star and regular business membership cards are required to cover a $60 annual subscription that allows them to shop at Costco without restrictions or obtain the Costco Shop Card.
Gold Star Executive and Business Executive memberships are more expensive, but they come with a broader range of benefits than standard membership options. Costco has had high customer loyalty scores for several decades, which proves that it has already fulfilled its goal to provide its clients with excellent service.
Setting the Retail Industry’s Standards
A single Costco warehouse generates up to $160 million of annual revenue, and the company has 581 locations in 487 US cities. The retailer’s annual gross profits in 2021 increased by 15% from the year before, and the same trend continued through the first three quarters of 2022.
Its competitive pricing and store concepts are geared toward small businesses, making Costco one of the best supplier options for restaurants or companies in constant need of goods.
In addition to purchasing products in bulk directly from manufacturers, the retailer utilizes a cross-docking delivery system that reduces storage costs.
The promise of providing the members with low-cost products and services laid out in the mission statement is made possible by the company’s efficient supply and delivery chain.
Costco Vision Statement
The retailer’s business model is based on bulk sales, private label branding, and well-organized inventory management. These factors have played critical roles in establishing the company as a global leader and enabled it to transform the retail industry.
Costco doesn’t have a clearly defined vision statement, but its plans for the future are summarized in this section of the company’s About Us page:
‘The entrepreneurial drive for excellence has continued to define Costco staff at every level. From its management team to the people on the warehouse floor, everyone is united in a common goal to exceed member expectations.’
These words indicate that all company’s employees rely on ambition to deliver better services than the competition. It’s worth adding that Costco has a variety of charity, sustainability, and community outreach programs that are integral parts of its vision.
The brand has distinguished itself from other retailers by offering the lowest prices for high-quality products. This strategy has served Costco well as the company continued to grow despite the challenges it faced during the pandemic.
The retailer values product quality over diversity, so the inclusion of new brands in its portfolio seems unlikely. Instead, the company keeps introducing new shopping perks for its club members, such as Costco Next which offers 20% off for products made by selected brands.
Improving the quality of the online shopping experience is yet another area Costco might focus on in the future.
Supporting Local Suppliers
Companies like Starbucks, Townsend Farms, or Humboldt Creamery manufacture most of the products distributed under the Kirkland Signature brand. Costco owns a number of organic farms and grows a portion of fruits and veggies sold at its warehouses.
Still, the company supports organic farmers by helping them purchase land or equipment in order to meet the growing demand for organic produce. This program is currently only available in the United States, but it will continue to grow as the company extends its global presence.
Implementing the Climate Action Plan
The company’s key sustainability concepts are the basis of the climate action plan. Its goals are to reduce Costco’s CO2 emissions to zero throughout its supply chain, protect freshwater sources, and use recyclable product packaging.
Besides its efforts to slow down climate change, Costco donates substantial funds to charitable causes. It supports food banks and minority organizations and is dedicated to diversifying its supply chain.
The company partnered with World Vision to create a program that delivers returned products to disadvantaged people worldwide.
Continuing the Company’s Expansion
In May 2022, Costco announced the plan to open thirty new warehouses by the end of the year. The company’s plan involves six locations in the US and additional stores in Mexico, Canada, South Korea, Japan, and New Zealand.
These expansions correspond with the company’s continuous revenue growth from 2010 onward. Preserving this trend and increasing annual revenues will be one of the company’s top priorities in the next five years. Fortifying its presence in international markets is vital to its long-term strategy.
Costco Core Values
The wholesale retailer’s core values are outlined in the Code of Ethics, which serves as a set of rules the company relies on to accomplish its goals. Moreover, they’re a road towards rewarding Costco’s shareholders. The Code of Ethics contains these four values:
- Obey the law
- Take care of our members
- Take care of our employees
- Respect our suppliers
Each of these guidelines reflects on core areas of Costco’s operations as they highlight the importance of establishing trust with members, treating all business partners with respect, and staying in compliance with the law for the company’s future. Let’s take a brief look at Costco’s core values.
Obey the Law
Following safety guidelines, meeting ecological standards, or respecting the rule of law in all foreign countries where the company has its offices and warehouses is paramount for its success. Costco’s employees are expected to refrain from receiving or offering bribes.
Take Care of Our Members
The company’s customers are its key focus because the company cannot survive without their trust. That’s why Costco promises to deliver excellent products at affordable prices and meet or exceed customer care standards.
Take Care of Our Employees
Good wages, a stimulating work environment, and career advancement opportunities are some of the advantages Costco’s employees have. The retailer’s Open Door policy enables its leaders to resolve conflicts at all levels.
Respect Our Suppliers
The company shows respect towards its suppliers by treating their property with care, establishing civil communication, and fulfilling its commitments in a timely manner. The same applies to the company’s shareholders because Costco aims to honor its obligations toward them and reward them for their investments.
- Costco’s mission statement contains references to its business model
- The company’s philanthropic efforts indicate its course going forward
- The retailer’s primary purpose is to provide the best services and products to its customers
- Putting the Climate Plan into action is one of the biggest challenges Costco is facing in the future
Frequently Asked Questions about Costco’s Mission Statement
Question: Does Costco offer refunds?
Answer: Yes, all products members purchase can be returned to any Costco warehouse, but the company retains the right not to issue a refund without proof of purchase.
Question: Can non-members get prescription drugs at Costco pharmacies?
Answer: Anyone can purchase prescription drugs at Costco pharmacies.
Question: Is Costco Travel available to all members?
Answer: Costco Travel is available to all Costco members, but the 2% reward annual program is only available to Executive members.
Question: How long does Costco need to build a new warehouse?
Answer: The construction of a new Costco warehouse takes around six months and costs between $12 and $18 million.
Question: How many transactions do Costco process every day?
Answer: The company processes more than two million transactions daily.
Other Companies with Similar Values
The company’s perpetual growth hasn’t gone unchecked since wholesale companies like Walmart, Target, or BJ’s Wholesale Club are contesting Costco for each percent of the market share. At the same time, Costco is trying to keep pace with Jeff Bezos‘ Amazon and other e-retailers.
These companies have similar missions and visions as their goal is to offer excellent products at low prices. Here’s what Costco’s main competitors strive for:
- BJ’s Wholesale Club – Creating value for its customers is the primary goal of BJ’s Wholesale Club. The retailer has a slightly more diverse product selection than Costco.
- Target – The company values its customers and wants to help them find joy while shopping for everyday items. Target offers medium and high-quality products.
- Walgreens Boot Alliance – Even though it is mostly a pharmacy chain, Walgreens also offers groceries and countless other products. Still, the company isn’t a wholesale retailer, and it doesn’t offer memberships to its customers.