Surrendering to CostCo
Everyone thinks that CostCo started in Kirkland, Washington, just outside of Seattle back in 1983, just when Howard Schultz was getting his hands on this little coffeehouse startup called Starbucks and starting to rev it up into a global retailing juggernaut. But by virtue of its merger with another big-box retailer named Price Club, CostCo can claim to have started back in 1976 right here in good old San Diego. The behemoth now boast 833 warehouse stores worldwide with fully two thirds of those in the U.S. (one warehouse for every 575,000 people in the country). One third of the American population (111 million) go to CostCo each year. Since there is one CostCo warehouse for every 355,000 people in Canada, you can assume the penetration there is even greater. And CostCo has ventured into ten other foreign countries so far, even having a store in little old Iceland. I think it is safe to say that as the #10 company in gross sales in the S&P 500 (cheating a bit since we all know retailers have larger gross numbers with much more modest profit numbers), CostCo is a well-established retailing phenomenon. It’s still only one quarter of the way to being a member of the elite $1 Trillion Market Cap Club, and at $235 Billion it ranks #25 in the U.S. with the only retailers that are bigger being Walmart and Home Depot, both of which have been around longer. And it all started near here, so thinking the place through makes sense to me here and now.
I have actually been in a CostCo once before when I lived on Staten Island. I recall that we needed something for a gathering and only CostCo had it, so I joined just to be able to buy whatever that was. I haven’t been back since. Truth be told, I do very little shopping for the household in any venue, and what I do is heavily skewed to the online. But some people swear by CostCo. It is their sacred alter of commercialism, not because of the massive floor plans stocked to the ceiling with every manner of consumable good (and increasingly, hard goods and services as well). I see that the jewelry counter and the travel service are new up and coming arenas for them, so who knows what’s next.
For many years I had a motorcycle friend that was in the prepared foods business (he made a series of canned chilis, stews and soups) and he thought CostCo was the holy grail of retailing. He would lecture me on every ride that the secret to retailing success was to get placed in CostCo and that you could even improve on that if you white labeled your goods by letting CostCo put its chosen brand on your canned product. He had them put the name Trailhead Chili out there and it apparently became a favorite of the Utah Mormon crowd that was always looking to stock its survival caves with canned goods that would taste good and last for a decade or more. I imagine that despite him having sold his company to Bumble Bee many years ago, there are still caves full of Trailhead Chili up in the Wasatch and Uinta Mountain Ranges.
Recently, CostCo has been coming up a lot again in my life since my new pal Mike is a devotee of CostCo and makes regular weekly pilgrimages to the Mecca of commerce that he sees it as being. I like playing into that theme since it always seems like a good healthy piece of Americana humor worth exploiting. The retired guy who wanders around CostCo looking for a bargain is sort of a stereotype by my way of thinking. But Mike takes his CostCo seriously and seems immune to my kidding since he seems to feel he gets more value there than can be diminished by any kidding. He is a true believer.
Today, Mike called me to ask if I wanted to go to CostCo with him tomorrow morning. While I was inclined to ask if he was fulfilling some pyramid-scheme formula by getting me signed on, I decided to hold back on the joking because Mike takes CostCo so seriously. Instead, I immediately signed on for the expedition. I do not know which of the thirteen CostCos in San Diego County Mike tends to frequent and which he wants to go to tomorrow, but I’m guessing that it might be the new large one in San Marcos. That sits in a building they retrofitted from a Fry’s Electronics megastore that was a ridiculously unsuccessful. I recall going in there a few times to find some simple electronics item and getting lost in aisle after aisle of junk that would never sell to anyone. I’m very interested to see what the store has to offer and, more importantly, how Mike approaches that offering. I know most people have a supermarket strategy for going through the store for their regular shopping needs, and I am expecting that Mike has a similar strategy for his regular visits to CostCo (he has described this as just such a regular visit). When I go to Home Depot or Lowe’s, I am usually targeting a specific purchase or list of items. Often, I have taken to pre-ordering and just going to the customer service desk to pick up the items rather than chasing them around the store. I would define those visits are tactical. I suspect that the more generalized big-box array of products at CostCo will require a very different approach.
Mike doesn’t know this yet, but I have purchased an Executive Membership for $120. That’s his level of membership, so maybe that’s presumptuous of me, but I will try to remind him that imitation is the purest form of flattery. So, I am not treating tomorrow’s adventure as exploratory, but rather more educational. I KNOW that CostCo has things to offer Kim and me, but I just don’t know what that is yet and how to access it. I am certain it is more than cheap tissues and paper towels in bulk (although I can be tempted to throw a few of those in the cart). What I don’t know is what will interest me the most and how best to uncover the best values. I am not, nor have I ever been, a great admirer of the art of shopping, especially at places like department stores where I have always believed that there is dysfunctionality in product inundation. I am also a less disciplined consumer than others and I worry a bit that I may be drawn in to buy things I don’t really need or want. It’s hard to blame anyone else or even the store for that, but it may be a limiting reality that will make me want to control my approach to my shopping at CostCo. So, lots to unpack about me and CostCo tomorrow.
I like to think of myself as a man of open-mindedness. I did not start the day wondering how I was going to get to a place of understanding about CostCo, but Mike strikes me as a serious guy and I always feel I can learn things from serious people. He is more careful with his money than I am (not such a high bar to get over, I should add). I have more time now than I used to, so why not give CostCo a try? So tomorrow I will be surrendering myself to CostCo, just like a third of the population of America. Let’s see what happens.