CORPORATE OVERVIEW. Costco Wholesale (formerly Costco Companies, Inc., and prior to that, Price/Costco, Inc.) began the pioneering membership warehouse concept in 1976, in San Diego, CA. The company operated 634 warehouses worldwide as of August 2013, mainly in the U.S. and Canada, with 36.9 million paid memberships. COST also operates an e-commerce website, costco.com.
A typical warehouse format averages about 143,000 sq. ft. Floor plans are designed for economy and efficiency in the use of selling space, in the handling of merchandise, and in the control of inventory. Merchandise is generally stored on racks above the sales floor, and is displayed on pallets containing large quantities of each item, reducing the labor required for handling and stocking. Specific items in each product line are limited to fast-selling models, sizes and colors. COST carries an average of about 3,700 stock keeping units (SKUs) per warehouse, well below the 45,000 to 140,000 SKUs of a typical discount store or supermarket.
COST has two primary types of memberships: Gold Star (individual) and Business members. As of August 2013, a Gold Star membership cost $55 annually. There were 28.9 million Gold Star members as of August 2013, up from 26.7 million in August 2012. Businesses, including individuals with retail sales or business licenses, may become Business members by paying an annual $55 fee, with the ability to purchase add-on membership cards for $55 each. As of August 2013, there were 10.1 million Business memberships (including add-ons), compared to 10.2 million in August 2012. Executive memberships, available for a $110 annual fee, offer business and individual members savings on services such as merchant credit card processing and small business loans, as well as a 2% annual reward, up to a maximum of $750 annually, on qualified purchases. Executive members made up 38% of the primary membership base, excluding add-ons, in FY 13 (Aug.), about the same as in FY 12. These members account for approximately two-thirds of total sales.