Costco faced an unusual challenge when
opening in Korea two decades ago. The best
way to establish a toehold in the country was
through a licensed agreement with Shinsegae
department stores. So the first three warehouses
in Korea were operated under Shinsegae management until Costco bought out the bulk of
the Korean company’s interest in 1998.
Today, the country’s 11 warehouses look,
feel and operate like Costcos everywhere. “A
thousand or more Koreans went to bed one
night working for a Korean company, then
woke up the next morning working for an
American company that had a totally different value structure, a totally different way of
operating,” says Preston Draper, Costco’s
CONTINUED ON PAGE 32
employee morale to the next level.”
That’s important, as Costco in Taiwan looks
forward to two key developments: starting an
e-commerce site for local residents, now under
construction, and growing the Tmall site in
China. The latter, operated out of Costco’s
Taiwan office, opened in October and has been
successful since the start. It features 150 items,
from packaged food to health and beauty aids.
And one of the most popular so far: Kirkland
Signature Mixed Nuts.—TT
South Korea
First location: Yangpyung
Opening date: 1994
Number of locations: 11
Most popular item: Bulgogi beef
Unique item not found in the U.S.:
Sea cucumbers
country manager in Korea. “It took us time to
build that sense of Costco, and certainly now
Costco in Korea and the Costco employees
are very much Costco-centric.”
Aside from the large and colorful fresh fish
departments featured in all Asian Costcos,
many of the products in a Korean warehouse
look like those you’d find in a U.S. Costco. Some,
however, have been slightly modified because of
Korean restrictions on certain ingredients.
A visitor would not notice any of these
complexities—past or present—behind the
operations in a Korean warehouse. Instead,
what would stand out are live fish tanks,
where members can see their purchase being
filleted on location, or the selections of local
favorites such as kimchee and bulgogi beef.
Korea has about 1. 6 million Costco
members. A 12th warehouse is due to open
later this summer, and another key addition
is under development: a Korean e-commerce
site.—TT
First location: Thurrock
Opening date: 1993
Number of locations: 26 ( 27 in August)
Most popular item: Kirkland Signature
British boneless chicken breast fillets
Unique item not found in the U.S.:
Marmite (food spread)
United Kingdom
Clockwise from top left: Australian
Vegemite, a local favorite; Guadalajara,
Mexico; Mexican paella; Costco executives
ring in the Izumi, Japan, opening with a
sake barrel ceremony; members wait outside the Cheonan, South Korea, warehouse.
Ever hear of the food spread Marmite?
What about a candy called Maltesers?
Cottage pies? Jacket potatoes? These popu-
in the U.K., and they’re great examples of
how the company strives to adapt the prod-
ucts it sells, as well as its overall merchan-
dising and operating concepts, to fit the
individual needs and tastes of the countries
and communities it serves.
During his nine-year tenure as Costco’s
U.K. country manager, Steve Pappas says he’s
noticed that this process often leads to what
he calls a good “cross pollination” of product
development. “For years now, our Bakery
Department has been making hot cross buns,”
Steve says. “They are really popular at Easter
time. Now, I see the U.S. is offering them.
They’ve taken a page out of our book, as we so
often do from theirs.”
When Costco opened its first U.K. petrol
(aka gas) station in Liverpool in June 2014, it
was an instant success. “We’ve had news sta-
tions and radio programs praising our petrol
station, as well as the company,” Steve says.
“It’s a success that is bringing in new mem-
bers. You can’t buy advertising that’s this
effective. We plan to open two more petrol
stations before the end of 2015.”
Since Costco opened its first U.K. ware-
house, the company has overcome many
economic and industry challenges, enabling
it to expand to 26 warehouses, with 5,930
employees, across the country. Steve cites
the company’s merchandising philosophy as
a key to its success. “People seem to like top-
