It’s been open for less than two weeks, but it’s safe to say Costco North Lakes has been one of the biggest Brisbane retail stories of the year. So what DON’T you know about the wholesale giant?
10 things you don’t know about Costco
Costco is “inbred”
We mean that in a good way, if that’s possible. Costco’s John Matthews, in charge of the company’s human resources, once commented that Costco is “awfully inbred“. Costco doesn’t like to hire business grads — they prefer to reward and encourage loyalty by hiring from within the company.
This system produces some oddities, like Costco’s lead wine buyer, Annette Alvarez-Peters, who knew nothing about wine before she was promoted from Costco’s auto parts division and is now responsible for over one billion dollars in wine sales per year, making her one of the most powerful figures in the wine industry. (“At the end of the day,” a non-plussed Alvarez-Peters once told CNBC, “it’s a beverage.”)
Costco is also known for paying its employees more than competitors like Walmart, and providing employee benefits their competitors don’t. Costco’s reputation for treating its employees generously — “I just think people need to make a living wage with health benefits,” says CEO Craig Jelinek — adds to the cult-like appeal of the store, because unlike some other US retailers, you don’t feel like you’re participating in a human rights violation by shopping there.
Costco doesn’t stock as much as you think
Despite its reputation for excess, your average Costco store only stocks around 4000 items. That might sound like a lot, but your average supermarket stocks 40,000 items (and your average Walmart stocks over 100,000 items). There’s a simple strategy at work here — choice is the enemy of the impulse buy. If you offer a consumer too many choices, they might just walk away instead.
For that matter, Costco barely breaks even on the items they do sell — with a typical 10 per cent mark-up (capped at 15 per cent, tops), there’s only so much profit they can make from them. Where’s their $1.5 billion annual profit coming from, then? Memberships. You have to be a paying member to shop at Costco, and nearly 90 per cent of Costco customers re-up their membership every year.
Costco’s best seller is toilet paper
Costco sells more than a billion rolls of toilet paper every year. That’s enough toilet paper to wrap around the earth 1200 times, if you’re so inclined.
Costco doesn’t advertise
Costco doesn’t put any money towards advertising campaigns or PR professionals, because, let’s face it, they don’t really need to. Most Costco promotion comes from word of mouth generated by the store’s low prices and what it refers to as its “treasures”, the novelty items — giant chocolate bars, enormous teddy bears, barrels of Jack Daniel’s whisky, diamond rings valued at half a million dollars — that generate media coverage and make shopping at Costco feel like an ‘adventure’.
Costco’s hot dogs are impervious to inflation
In the US, Costco’s hot dog and soda combo has cost the same price ($1.50) since 1985. (In Australia, it’ll set you back a whole $2, but don’t expect that to rise anytime soon.) In order to keep prices low, Costco built its own hot dog making facility in California’s Central Valley, which apparently exists outside the conventional boundaries of space and time.
Costco is also famous for its pizza, of course, which certainly isn’t for CEO Craig Jelinek’s benefit — he claims he’s never touched the stuff.
Costco doesn’t back down from a fight
Costco has a history of roughhousing with some of the biggest brands in the world. In 2013, Tiffany & Co filed a multi-million dollar lawsuit against Costco for selling inauthentic “Tiffany engagement rings”. In 2009, a dispute with Coca-Cola kept Coke products off Costco shelves for a month; Costco resumed selling coke once they felt they won the negotiation, but pulled Coca-Cola from their food courts (and replaced it with Pepsi) after another falling-out last year.
Costco stopped carrying Apple products in 2010 after a dispute with the consumer electronics monolith, although rumours are flying that the hatchet’s been buried and you’ll be able to buy iPhones and iPads at Costco soon.
When Starbucks failed to pass along savings to Costco after a price cut in coffee beans, Costco threatened to pull all Starbucks products from their stores. Furious Starbucks chairman Howard Schultz reportedly called Costco owner Jim Sinegal and asked, “Who do you think you are? The price police?”
Of course, Sinegal responded, “Yes”.
Costco “accidentally” labelled the Bible as fiction
Late last year, Costo accidentally labelled a small percentage of Bibles as “fiction”, which naturally made them enemies of Fox News and a cause célèbre for US progressives. The company insists the move was an accident caused by a rogue distributor, but the incident just helped grow the Costco legend in many quarters.
Costco lets you park your horse
A Costco store in Lancaster, Pennsylvania, has designated horse-and-buggy parking for the Amish, if that’s the kind of thing you think you might need.
Costco buys half the world’s supply of cashews
Think about that — if you produce cashews, anywhere in the world, there’s a 50-50 chance they’re going to end up at a Costco store. Costco’s cashew containers are square, not round, in order to save space on pallets and cut down on truck trips.
Kirkland Signature was almost named ‘Seattle Signature’
Costco’s ‘signature’ line of products, Kirkland Signature, makes up about 15 per cent of the store’s total product line. It’s named after the town of Kirkland, Washington, where Costco’s corporate headquarters was located at the time, but was originally going to be called ‘Seattle Signature’ before Jim Sinegal found he couldn’t clear the name.
Do you know any obscure Costco facts? Let us know below!
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