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Costco, to no great surprise, is much in the news lately — and, no great surprise, the news is overwhelmingly positive.
To begin at the beginning, Craig Jelenik, the retailer’s longtime (and very effective) chief executive officer, has retired, ending an era of unprecedented retail success. Simultaneously, Richard Galanti, the company’s equally talented chief financial officer, announced that he, too, will shortly end his remarkable Costco career.
No matter. Costco, unlike many of today’s leading retailers, boasts a cadre of exceptional management talent, far more than will be necessary in the coming years to guarantee that the price club behemoth remains the world’s third-largest retailer, behind only Walmart and Amazon.
Other news? There’s plenty. For one thing, The Economist, that estimable weekly news magazine, saw fit to devote an article in a recent issue (February 17) to Costco’s wonders, heading the story this way: “Why Costco is so loved.”
The story largely covered familiar ground: the longevity of the $1.50 hot-dog-and-soft-drink combo; the retailer’s ability to maintain 12% gross margins, about half of Walmart’s 24%; the company’s extraordinary share price, some 430 times what it was when Galanti joined the company nearly four years ago; the legendary success of its membership fee program, which in 2023 netted the company $4.6 billion in revenue, more than half its operating profit; the retailer’s amazing ability to make its strategy work, in part by offering its customers a limited selection (by today’s standards) of 4,000 SKUs; the extraordinary success of its Kirkland house label, which now accounts for about 25% of the company’s total sales; the ability of the retailer to retain its employees, evidenced by the fact that turnover averages just 6% annually and one-third of its workers have been with the company for longer than 10 years. And so on …
Finally, at least for the moment, comes the publication of a new (or perhaps not so new) book, written by a husband and wife team who boast that they frankly adore Costco. The title: The Joy of Costco. Inside are some 275 pages of anecdotes, tips and secrets of shopping Costco gleaned from the couple’s personal odyssey to Costco. They claim, for instance, that since 2016 they have traveled over 200,000 miles on a whirlwind tour around the globe to one purpose: shopping as many Costco warehouses as they could.
To find out just how well they succeeded, I encourage you to buy the book. The price is just $35. One thing you’ll quickly learn: Costco sells seven times more hot dogs than all the Major League Baseball stadiums combined. Which is probably why Jim Sinegal, the retailer’s legendary cofounder, when asked by a journalist when Costco would increase the price of its hot-dog-soft-drink combo, offered this terse but appropriate response: “After I’m dead.”
