Costco
Costco Wholesale Corporation (commonly shortened to Costco) is an American multinational corporation which operates a chain of membership-only big-box warehouse club retail stores.[3] As of 2023, Costco is the third-largest retailer in the world[4] and is the world's largest retailer of choice and prime beef, organic foods, rotisserie chicken, and wine as of 2016.[5] Costco is ranked #11 on the Fortune 500 rankings of the largest United States corporations by total revenue.[6] Costco uses a club warehouse wholesale retailer channel of distribution while also selling their private label brand directly to consumers.[7]
Not to be confused with Cosco or Cusco.Company type
- Nasdaq: COST
- Nasdaq-100 component
- S&P 100 component
- S&P 500 component
September 15, 1983 (as Costco)
Seattle, Washington, U.S.
- Hamilton E. James
- (chairman)
- Ron Vachris
- (president and CEO)
Kirkland Signature
US$242.3 billion[2] (2023)
US$8.114 billion[2] (2023)
US$6.292 billion[2] (2023)
US$68.99 billion[2] (2023)
US$25.06 billion[2] (2023)
127.9 million[2] (2023)
316,000[2] (2023)
Costco's worldwide headquarters are in Issaquah, Washington, an eastern suburb of Seattle, although its Kirkland Signature house label bears the name of its former location in Kirkland. The company opened its first warehouse (the chain's term for its retail outlets) in Seattle in 1983.[8][9] Through mergers, however, Costco's corporate history dates back to 1976, when its former competitor Price Club was founded in San Diego, California.[10][11][12] As of February 2024, Costco has 871 warehouses worldwide: 602 in the United States, 108 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in South Korea, 15 in Australia, 14 in Taiwan, six in China, four in Spain, two in France, and one each in Iceland, New Zealand, and Sweden.[1][2]
Costco is mainly owned by institutional investors, who own over 70% of shares. The largest shareholders in December 2023 were:[98]
Publications[edit]
Costco Connection[edit]
Costco Connection is a magazine sent free to the Costco executive members; it can also be accessed online by anyone, free of charge.[144]
The magazine was established in 1987 as a newsprint publication and converted to a magazine in 1997.[145] It features articles which regularly tie into the corporation along with business, celebrity features, cooking, entertaining, health, home improvement, and social articles, as well as coupons and ads. MediaPost reports: "While about 90% of the magazine's advertising is co-op, increasingly national advertisers such as Procter & Gamble are buying space, notes Roeglin -- presumably because of the pub's gargantuan reach and the data it has on its subscribers (whose average household income is $156,000 a year). 'We see about 56% of our subscribers a month buy something at one of our stores based on something they've read in the magazine,' says Roeglin."[146] The magazine is one of the largest-circulation print monthlies in the United States[146] and is the third in circulation figures in the United States after AARP The Magazine and AARP Bulletin.
Services[edit]
Costco Auto and Home Insurance[edit]
Costco has an agreement with CONNECT, powered by American Family Insurance, for auto insurance, home insurance and umbrella insurance.[148]
Costco Optical[edit]
Costco Optical ranks as the fifth-largest optical company in the US, as of 2015.[149] Optometrists working at Costco locations will see patients without Costco memberships,[150] although a membership is required to fill a prescription at the optical department.[151]
Discontinued concepts[edit]
Costco Home[edit]
The first Costco Home warehouse opened in December 2002, in Kirkland, Washington.[201][202] The warehouse's concept was to combine the value, setting and members-only elements of Costco's warehouse clubs with the product array one would find at an upscale home store, such as Fortunoff or Crate & Barrel. The Costco Home warehouses sold furniture, housewares, kitchen products and accessories from higher-end brands such as Lexington, Ralph Lauren and Waterford[203] in a warehouse-club setting. A second warehouse opened in 2004 in Tempe, Arizona.[202]
On April 2, 2009, the company announced that it would be abandoning its Costco Home concept, closing the two existing stores in Kirkland, Washington and Tempe, Arizona on July 3, 2009, and abandoning plans for a third warehouse in Portland, Oregon.[202][204]
Costco Fresh[edit]
A grocery-centered format, named Costco Fresh, was announced in September 1999 for a 75,000-square-foot (7,000 m2) two-story space in Manhattan, New York City.[205] The company pulled out of an agreement to build the Manhattan store later that year after cost increases and local protests.[206] The concept was revived in late 2002 for a store in Bellevue, Washington, near its Issaquah headquarters, at a former Kmart. The new store would primarily sell fresh produce, meats, seafood, and baked goods instead of bulk items, but would also have several features from normal Costco warehouses; it would also have a modified logo, with a fruit stem growing from the first "o" in the Costco name.[207] The concept was dropped the following year, but the company retained interest in building a normal Costco store at the Bellevue site until 2008, when they abandoned the plans due to zoning regulations that would have required daylighting an underground creek.[208][209]
Controversies[edit]
In 2010, Mercy for Animals conducted an undercover investigation at Buckeye Veal Farm, a veal supplier to Costco.[210] Immediately following the investigative release, Costco adopted a policy against purchasing veal from producers that use the crate-and-chain production method.[211] The case prompted Ohio lawmakers to vote in favor of a veal crate phase-out in the state.[212]
In 2012, Mercy for Animals conducted another undercover investigation of a pork supplier to major retailers such as Costco, Walmart, Safeway, Kroger, and Kmart.[213] Before the public release of the investigation, Costco announced they would begin requiring their pork suppliers to phase out gestation crates.[214][215]
In 2014, The Guardian reported that Costco is a client of Charoen Pokphand Foods. Over six months, The Guardian traced down a supply chain from slave ships in Asian waters to leading producers and retailers. Costco has published a statement saying it has had a supplier code of conduct since 1999 which does not allow this practice, and that independent auditors check for violations regularly.[216][217][218][219]
In 2014, the U.S. Department of Justice and the United States Environmental Protection Agency said that Costco had failed to promptly repair leaks from its refrigeration equipment of the refrigerant chlorodifluoromethane at its stores. Costco paid a fine of $US335,000 and agreed to spend $US2 million over three years to fix refrigerant leaks and make improvements at 274 stores.[220]
In 2015, the Humane Society of the United States conducted an undercover investigation at an egg supplier to Costco.[221] An undercover worker at Hillandale Farms, a major egg supplier to Costco, filmed conditions in which egg-laying hens lived in tiny wire cages.[222] Following the investigations, several celebrities including Brad Pitt and Ryan Gosling publicly wrote to Costco to address this issue.[223] Following efforts by animal protection nonprofits including The Humane League,[224] Costco released an updated commitment to source exclusively cage-free eggs in its operations.[225]
In July 2015, the U.S. Consumer Product Safety Commission recalled the EKO Sensible Eco Living Trash Can that Costco was selling due to a black plastic protective collar in the opening on the back of the trash can that could be dislodged and expose a sharp edge. Costco was fined US$3.85 million for receiving 92 complaints about the trash can, including 60 complaints from those that sustained injuries, but did not notify the commission about the defect.[226]
In 2016, a follow-up to Costco's shift to cage-free eggs by animal rights group Direct Action Everywhere (DxE) reported cannibalism and high mortality at a cage-free Costco egg supplier.[227][228] Costco denied the allegations, but the video sparked a discussion about animal welfare problems continuing to exist at cage-free egg farms.[227] Writing in The Huffington Post, DxE co-founder Wayne Hsiung argued that the new investigation, rather than suggesting that Costco should keep birds in cages, indicated that hens should have the right not to be raised for food or kept on farms at all.[229]
In September 2016, Costco self-disclosed conduct to the Office of Inspector General after its pharmacy in Waltham, Massachusetts improperly altered prescription drug claims to Medicare Part D and the Massachusetts Medicaid program that resulted in higher reimbursement than was appropriate. They paid a fine of US$340,157.25.[230]
In January 2017, Costco was brought to court in the US for lax pharmacy controls by violation of the Controlled Substances Act. Allegations such as Costco "filling prescriptions that were incomplete", or were for substances "beyond various doctors' scope of practice". The case was settled after Costco paid US$11.75 million.[231]
In August 2017, a federal judge ordered a "deceptive" Costco to pay Tiffany & Co. US$19.4 million for misleading consumers into thinking they could buy legitimate Tiffany merchandise at warehouse club prices.[232][233]
Costco was criticized in 2019 by the Natural Resources Defense Council (NRDC) and SumOfUs for using virgin Canadian boreal forest to make its toilet paper. NRDC says that over the previous twenty years, 28 million acres of Canadian boreal forest had been cut down to make toilet paper.[234][235]
In 2019, the Ontario Ministry of Health fined Costco $CA7.2 million after it found that Costco pharmacies were accepting advertising services from a generic drug manufacturer in Ontario, where it is illegal for a pharmacy to accept rebates, or kickbacks, from a generic drug manufacturer in exchange for promising to stock its brand of drugs. Two Costco pharmacy directors were referred to the Ontario College of Pharmacists and were fined for the misconduct.[236]
In September 2020, CBS News reported that Costco has stopped selling Palmetto Cheese after the owner of the pimento cheese brand called Black Lives Matter a "terror organization." Costco posted a note to the item in their Myrtle Beach location indicating that the item will not be reordered, and over 120 Costco's throughout the US will no longer be carrying the item.[237]
In October 2020, Costco dropped Chaokoh coconut milk over the allegations of forced monkey labor. PETA accused the manufacturer, Theppadungporn Coconut Co., of using forced monkey labor, finding cruelty to monkeys at their farms and facilities. Ken Kimble, Costco's Vice President of Corporate Food and Sundries, stated Costco has launched an investigation regarding the issue and have ceased purchasing from the supplier/owner of the brand Chaokoh condemning the use of monkey labor. Kimble also stated that Costco will continue to monitor the implementation of the harvest policies and once satisfied will resume purchasing.[238]
In December 2020, Costco announced plans to end the use of eggs from caged chickens throughout its operations worldwide.[239] It became the first US retailer to issue a global policy on the confinement of animals in its supply chain.[240] Josh Dahmen, Costco financial planning and investor relations director also said: "We are in the process of making that transition to cage-free eggs. We will continue to increase the percentage over time, with a goal of eventually getting to 100%."[241]
In 2023, the Kaohsiung Department of Health fined Costco numerous times for selling bags of mixed berries imported into Taiwan, that tested positive for Hepatitis A. Costco was fined a total of NT12.5 million and was temporarily barred from selling mixed berries in the country.[242][243]
In June 2023, an employee named Kim Dong Ho in Hanam, Gyeonggi-do, South Korea who was assigned to organize shopping carts, died of heatstroke while at work. South Korean government guidelines state that outdoor workers be given a 10 to 15-minute break every hour during heatwave advisories; however, these guidelines were not strictly followed or enforced at the Costco store where Kim worked and he was given 15-minute breaks every 3 hours without a regular supply of drinking water.[244][245] The company was later fined 30 million won by the Ministry of Employment and Labor.[246]
In July 2023, Costco Australia paid $33,000 in penalties for mislabelling the origin of lobster products after importing lobsters from Canada, but labelling them as "Kirkland Signature PREVIOUSLY FROZEN WHOLE COOKED WA LOBSTER" and "Australian Lobster".[247]
In August 2023, the Environment Agency of Iceland fined Costco ISK 20 million for a diesel spill originating from a gas station in Garðabær, which contaminated the Hafnarfjörður sewage system.[248]
