The ubiquitous membership warehouse chain, Costco Wholesale has been recognized as one of the most efficient and successful American corporations by seattlepi.com, Bloomberg Businessweek and The Huffington Post, among others, for its uncommon business model that has built a loyal following and allowed it to become a Top 10 global retailer – all without an advertising or public relations department.
Costco is the place to shop for an array of items, often offered in bulk, at prices close to wholesale. Its policy mandates that markups stay low, never maxing out more than 14 to 15 percent over costs. Members, who pay a yearly fee of $55, have access to the cheapest prices of any other retailer.
Shoppers aren’t the only ones pleased with Costco’s way of doing business. Employees of the corporation benefit from CEO Craig Jelinek’s belief in raising the federal minimum wage and providing health benefits.
The average employee makes nearly $21 an hour, and 88 percent are covered by company-sponsored health insurance.
President Obama praised Costco’s style in his 2014 State of the Union address saying that the federal government ought to learn a few things from the corporation.
“Profitable corporations like Costco see higher wages as the smart way to boost productivity and reduce turnover. We should too,” Obama said.
Costco became the first company ever to grow from zero to $3 billion in sales in less than six years, and it did so without hiring a public relations staff and without advertising.
Since its first store opened in San Diego under the name Price Club in 1976, Costco has only had a few problems with animal welfare group Mercy for Animals and luxury jewelry retailer Tiffany & Co. Costco and Mercy for animals came to an agreement in 2011, and the lawsuit involving Tiffany & Co. was settled earlier this year.
Despite no PR team to lean on, Costco has done surprisingly well. If other companies tried Costco’s business model by foregoing public relations and advertising, would they be as successful?