Costco's Business Model

Founded by James (Jim) Sinegal and Jeffrey Brotman,[7] Costco opened its first warehouse in Seattle, Washington, on September 15, 1983.[8] Sinegal had started in wholesale distribution by working for Sol Price at both FedMart and Price Club. Brotman, an attorney from an old Seattle retailing family, had also been involved in retail distribution from an early age. Sol Price died on December 14, 2009 at 93.[9]

In 1993, Costco merged with Price Club (called Club Price in the Canadian province of Quebec). Costco's business model and size were similar to those of Price Club, which was founded by Sol and Robert Price in 1976 in San Diego, California.[5] Thus, the combined company, PriceCostco, was effectively double the size of each of its parents. Just after the merger, PriceCostco had 206 locations generating $16 billion in annual sales.[10] PriceCostco was initially led by executives from both companies, but then Sol and his son Robert Price founded Price Enterprises and left in December 1994.[5]

Prior to the 1993 Price merger, Wal-Mart founder Sam Walton wanted to merge Sam's Club with Price Club.[11]

The first Price Club location was opened in 1976 in an old airplane hangar,[5][10] previously owned by Howard Hughes, and is still in operation today (Warehouse #401 located in San Diego).

In 1997, the company changed its name to Costco Wholesale and all Price Club locations were rebranded Costco.[5][10]

[edit] Costco today

Entrance in Henderson, Nevada

In the United States, the main competitors operating membership warehouses are Sam's Club and BJ's Wholesale Club.[12] Although Sam's Club has more warehouses[13] than Costco, Costco has higher total sales volume.[14] Costco employs about 142,000 full and part-time employees,[6] including seasonal workers. As of September 2009[update] Costco had 55 million members.[15]

Costco was the first company to grow from zero to $3 billion in sales in less than six years.[10] For the fiscal year ending on August 31, 2009,...