Costco Connection - February 2012

14 percent over cost (15 percent for Kirkland Signature™ products); providing a money-back guarantee on products and membership fees; focusing on a narrow selection of products in a wide range of categories; proceeding with steady, but cautious, growth; and never selling seconds or other inferior goods.

1995 Gas stations, Kirkland Signature

All of these contribute to Costco’s success, comments Jim Cramer, host of CNBC’s Mad Money. “;ey [Costco] make it so I want to go,” Cramer tells ;e Connection, pointing out that he recently walked out of two local Costcos with a North Face jacket, an oversize ;ashlight for night ;shing and a complete emergency kit for his car— none of which were on his shopping list.

1997 Company name is changed to Costco Wholesale

COURTESY OF COSTCO WHOLESALE

“Customers come ;rst. Integrity is the cornerstone
upon which we must
build consumer con;dence that
creates customer loyalty.”

Opening day, Maebashi Gunma, Japan, August 2011.

—First tenet in original business manifesto by

Sol Price, founder of Price Club

CONTINUED FROM PAGE 25

1999 Costco.com is launched

“We learned discipline. We learned to be passionate about our work,” notes Franz Lazarus of his days at Fed-Mart, Price Club and now Costco, where he serves as Senior Vice President, Global Operations. “We learned that you must have high standards of ethics and that there is no room for shortcuts. And to do the right thing, even if it’s hard or painful.”

“We always felt we were consumer advocates. It was the right thing to improve people’s way of life by selling for as little as we can, not as much as we can. For other retailers, it was the other way around,” adds Rick Libenson. A;er beginning as a teenager at Fed-Mart and as a top executive at Price Club, Rick today sits on Costco’s Board of Directors.

Cramer says success for a company sometimes comes from things that can’t be precisely measured but still matter. Costco’s policy of paying above-average salaries and o;ering health insurance to most employees falls in that category, he says. Unlike traditional retail stores, Costco has very little turnover among its employees. ;at helps the stability of a company’s brand. “Jim [Sinegal] knew to treat people well,” says Cramer. “And if you treat them well, then a lot of things will ;ow from that.”

It’s all in a name

One morning circa 1990 at Costco’s home o;ce, which at the time was in Kirkland, Washington, Jim Sinegal and Phil Lind, then a General Merchandising Manager and

2000

Costco Travel

500

;e camaraderie and respect these team members had from those earliest days still is evident when you see them together. ;ere’s never been any doubt that Jim Sinegal was the man in charge, but the company’s success has derived from this core group and those they have brought into the business.

2006

Costco opens 500th warehouse, La Quinta, California

“If you’re not spending 90 percent of your time teaching,

you’re not doing your job.”

PHOTOS: COURTESY OF COSTCO WHOLESALE/MEDIA BAKERY/PHOTODISC

—Jim Sinegal

2009 First Costco in Australia

“I have a sense of accomplishment,” notes Joe Portera, an Executive Vice President who oversees Costco’s Eastern Division. “Not individual accomplishment, but for what a group has accomplished. ;ere has been a cohesiveness, a group mentality. Everyone here is working together with one common goal. Jim has instilled that.”

THE FUTURE

;e friendship and respect among the founders still infuses today’s Costco with a culture that emphasizes fairness. “Most people work here because of the way they are treated,” notes Dennis Knapp, Senior Vice President overseeing non-foods. “;e culture is very rare. It’s not just about saying it, it’s about doing it. Jim sets the foundation we all follow. Everybody in this company gets it.”