Creating a Company That Cares: Costco's Climb to the Top
Creating a Company That Cares: Costco's Climb to the Top
On September 15, 1983, Sinegal and Brotman opened their first Costco warehouse in Seattle, Washington. Based on a similar business model as Sol Price’s Price Club, Costco began charging a membership fee to its customers. In the beginning, it too catered primarily to small business owners.
Over the next ten years, Costco would continue to grow in both membership and sales. In 1993, after a decade of steady success, Sinegal decided to acquire the company he had helped his once boss grow. With the merger of Costco and Price Company, PriceCostco was formed, and effectively doubled the size of both. There were now over 206 locations of this growing retail company, which was conducting more than $16 billion in annual sales.
PriceCostco was being run at the time by both Sinegal and Sol Price. But, in 1994, Price left the company to found Price Enterprises with his son, Robert. In 1997, following the departure of his partner, Sinegal officially changed the company’s name to Costco Wholesale. The next year, at Costco’s annual meeting, Sinegal announced his new ambitious plans for expansion. “We expect to open about 18 or 19 stores this year and next,” he said, “then grow to about 25 or 30 a year worldwide after that.”
Today, by focusing on a strategy of high quality goods at low prices, Sinegal has managed to grow his retail warehouse club into one of the largest in the world. His company has a record 90 percent renewal rate for business membership, and individual customers have proven equally as ready to embrace a new $100 per year executive membership. Costco’s services have expanded to include everything from optical centres, pharmacies, photo centres, hearing aid centres, food courts, and gas stations. All of these have become major contributors to the company’s overall growth, with some, such as the optical centres even being rated among the best in the country in both quality and price.
Despite Costco’s tremendous success, Sinegal has maintained his salary of only $350,000, plus stock options. Among the CEOs of billion dollar corporations, he is one of the lowest paid. Conversely, Costco employees are some of the highest paid in the retail industry. In fact, Sinegal has frequently butted heads with investors who believe he is too generous to his workers.
But, Sinegal has never been one to care what others think. He stuck to his vision to create of the largest, most widely respected companies in America, and he is not yet done.
Creating a Company That Cares Costcos Climb to the Top
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Sinegal was in one of the top two positions of power of a rapidly expanding company, when he decided to give it all up on a whim. Sinegal wanted to be on his own, to have the feeling of success that only comes from when you have started your own company from scratch. And so, in 1983, Sinegal joined forces with Jeff Brotman, a lawyer and the son of a former clothing retailer, and created his own warehouse retail club.
On September 15, 1983, Sinegal and Brotman opened their first Costco warehouse in Seattle, Washington. Based on a similar business model as Sol Price’s Price Club, Costco began charging a membership fee to its customers. In the beginning, it too catered primarily to small business owners.
Over the next ten years, Costco would continue to grow in both membership and sales. In 1993, after a decade of steady success, Sinegal decided to acquire the company he had helped his once boss grow. With the merger of Costco and Price Company, PriceCostco was formed, and effectively doubled the size of both. There were now over 206 locations of this growing retail company, which was conducting more than $16 billion in annual sales.
PriceCostco was being run at the time by both Sinegal and Sol Price. But, in 1994, Price left the company to found Price Enterprises with his son, Robert. In 1997, following the departure of his partner, Sinegal officially changed the company’s name to Costco Wholesale. The next year, at Costco’s annual meeting, Sinegal announced his new ambitious plans for expansion. “We expect to open about 18 or 19 stores this year and next,” he said, “then grow to about 25 or 30 a year worldwide after that.”
Today, by focusing on a strategy of high quality goods at low prices, Sinegal has managed to grow his retail warehouse club into one of the largest in the world. His company has a record 90 percent renewal rate for business membership, and individual customers have proven equally as ready to embrace a new $100 per year executive membership. Costco’s services have expanded to include everything from optical centres, pharmacies, photo centres, hearing aid centres, food courts, and gas stations. All of these have become major contributors to the company’s overall growth, with some, such as the optical centres even being rated among the best in the country in both quality and price.
Despite Costco’s tremendous success, Sinegal has maintained his salary of only $350,000, plus stock options. Among the CEOs of billion dollar corporations, he is one of the lowest paid. Conversely, Costco employees are some of the highest paid in the retail industry. In fact, Sinegal has frequently butted heads with investors who believe he is too generous to his workers.
But, Sinegal has never been one to care what others think. He stuck to his vision to create of the largest, most widely respected companies in America, and he is not yet done.
Creating a Company That Cares Costcos Climb to the Top
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Stephanie RobeyStephanie Robey is President and CoFounder of Pivot Positive, LLC - an Internet marketing business focused on helping people start work at home ventures. Previously, she was employed at The Search Agency with over 20 years experience in graphic design and 10 years experience in online marketing. She was responsible for launching the Conversion Path Optimization (CPO) unit where she and her team have conducted hundreds of optimization tests for online companies across multiple verticals. She is a successful entrepreneur having started and sold 2 companies and remains on the board of directors of the third, PhotoSpin.com Stephanie began her career in the direct marketing realm creating and producing direct mail for many of the major cable television companies and directly attributes her understanding of Internet marketing to those early offline experiences. Stephanie is a graduate of San Diego State University with a BFA in Graphic Arts and also holds an Executive MBA from the Graziadio School of Business and Management at Pepperdine University. Read Steph's Blog Meet Steph and Dave Sign up for our Free 7-Day BootCamp: Self Employed & Rich - Visit Stephanie Robey's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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Staging DivaDebra Gould, aka The Staging Diva®, is President of Six Elements Inc., an internationally recognized home staging company. Inspired by many requests from aspiring home stagers wanting to start similar businesses, Gould created the Staging Diva Home Staging Business Training Program. Gould has trained over 1000 Staging Diva Graduates worldwide to start staging businesses. Buying decorating and selling six of her own homes in four years lead to an interest in real estate staging which she turned into a career with the launch of sixelements.com in 2002. Since then she has staged hundreds of homes in addition to teaching home staging training. Gould is the author of several home staging resources including a series of popular ebooks made up of a Design Guide, Color Guide and Portfolio Guide. For more information about Debra Gould visit stagingdiva.com. - Visit Staging Diva's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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