The Costco Connection

Expanding warehouse operations began with our North American neighbors: Canada in 1985 and Mexico in 1992. Today, you can also find Costco in Japan, Korea, Taiwan, the United Kingdom, Australia and Spain. Of the 679 global locations, 30 percent are outside the United States, with this number expected to increase to 35 percent within the next 10 years, according to Jim Murphy, Costco’s executive vice president of the international division.

“As a company, we are now 39 years old. We still
view ourselves as a growth company,” says Jim.
“There are a lot of opportunities in the U.S., Canada
and Mexico. But we see exciting growth opportuni-
ties outside of North America, both in existing mar-
kets and potential new markets where our model
would be successful.”
As for what’s inside the warehouses, Jim says
that 65 percent of international merchandise is spe-
cific to a given country—mostly foods that cater to
local taste preferences. The remaining 35 percent
comprises many of the same non-food items you’d
see in a U.S. Costco. And Kirkland Signature™ items
are universally revered for their quality and price.

In addition to warehouses, Costco also has international e-commerce sites in many countries where it does business.

Jim says that no matter where Costco puts
down roots, it’s important to maintain a consistent
company culture to ensure that all 189,000
employees worldwide are invested in its business
goals. He says that reiterating Costco’s history, val-
ues, ethics and merchandising strategies is crucial
to overseas success. “We don’t take it for granted,”
he says. “We pay good wages and benefits across
the board, but beyond that, we pay attention to
other needs, like how our employees are managed,
developed and treated.”
The following stories show the successes and
challenges of bringing Costco’s business model to
each of these countries, how they’re the same and
how they’re different. “Above all,” says Jim, “it’s hard
for competitors to match the quality of our people.
They’re our biggest asset. Our employees are great
across the globe. … And we’re upheld as a company
that consistently gets it right.”—Hana Medina CONTINUED ON PAGE 30

The final resting place of one explorer marks the beginnings of another; Costco Wholesale’s first Spanish home is in Seville, the city that holds the tomb of Christopher Columbus. With 1. 5 million inhabitants, it is the fourth-largest city in the country and the capital of Spain’s southernmost region, Andalusia.

Diane Tucci, Costco Spain’s country manager, says the Spanish were more than happy to usher in Costco. “The Spanish are excited to see something positive happening in their economy,” she says. “Unemployment is very high. In all of Spain, it is 27 percent. They’re very open and willing to [welcome] new businesses because they know it creates employment.” More than 148,000 people applied for the 190 positions at the Seville warehouse—a company record, says Diane.

Opening in a new country isn’t without challenges; many didn’t expect Spaniards—or those in the UK, Asia and Costco’s other international markets, for that matter—to embrace the idea of paying for a membership. “There were a lot of myths,” says Diane. “Now we’re at 35,000 members, which is huge. ... People have bought into the concept.” Most people in Spain live in apartments and high-rise condos, so many members split their purchases with other members.

Members go nuts for jamón ibérico (Iberian dry-cured ham), croquettes and local cheeses. But they’re also big fans of Japanese sushi and American products; the hot dog and soda combo in the Food Court and the deli’s rotisserie chicken are consistently top-selling items. “There’s nothing else like

Snapshots from Spain (clockwise from left): The sun sets on the Seville warehouse; racks of jamón ibérico (Iberian ham) displayed for purchase; members peruse the book table; a sample lady hands out Kirkland Signature Jelly Beans;