Costco Connection - October 2006

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The

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global

Costco

An American shopping concept

works well around the world

WHEN YOU’RE making your monthly, or weekly, trip to Costco, it probably doesn’t occur to you that thousands of miles away members in Asia, the UK, Canada and Mexico are also filling their carts with familiar items such as rotisserie chickens (with the heads left on in Taiwan) and local delicacies such as sea cucumbers.

Over the last two decades, Costco has successfully introduced its business model to six foreign countries on three continents. These introductions have been accompanied by a few hurdles, and even some resistance, but today have evolved into a seamless blending of cultures.

Currently 25 percent of Costco’s warehouses —129 locations—operate outside the United States (see sidebars). The expansion began in North America in the 1980s with the opening of warehouses in Burnaby, British Columbia, in 1985; Saint Laurent, Quebec, in 1986; and later in Satelite, Mexico, in 1992. Costco then moved into the UK, with the Thurrock, England, warehouse opening in 1993, followed by Asia in the 1990s: Yangpyung, South Korea, in 1994;

Kaohsiung, Taiwan, in 1997; and Hisayama, Japan, in 1999.

“The good news,” says Paul Moulton, executive vice president for real estate at Costco, who helped start Costco UK, “is that everybody everywhere likes to save money, and they appreciate the quality and value of what we have.”

Jim Murphy, senior vice president of international operations, says that exporting Costco’s philosophy of quality and value requires four elements: the right people, the right location and the right products at the right price.

Bringing in the right people is the first challenge. Jim explains that one way of helping the cultures mesh is to bring over a few employees who are steeped in the Costco corporate culture and then hire locals to make up the buying and operational teams. “We have a fairly unique corporate culture,” says Jim. “We believe in a handful of core values, such as obeying the law and respecting our members, employees and suppliers, and we instill those values as we develop our business.”