Hamilton “Tony” James, Chairman of Costco, recently shared an interesting anecdote illustrating the company’s success in selling high-end merchandise. He recounted how a Porsche dealer agreed to display their cars at a Costco location in Seattle, Washington. Unexpectedly, the entire inventory of these luxury vehicles sold out within a single week.
James noted this event as evidence of Costco’s ability to successfully move a wide range of items, even those with a hefty price tag. Speaking to Chief Executive Magazine, he stated, “Since the beginning, we’ve always known we could move anything in volume if the quality was good and the price was great.” He went on to list other high-end products that have found a market within Costco’s stores, including expensive champagne, luxury watches, and even gold bars.
Costco’s approach appears to be resonating across different income brackets. James, who has been on Costco’s board since 1988, explained that the company has carefully observed its competitors, ranging from small supermarkets to large online retailers. While addressing the needs of lower-income consumers is an important element of Costco’s strategy, James also pointed out that higher earners have played a significant role in enabling the company to “do remarkable things.”
Costco’s appeal to a diverse customer base has contributed to impressive financial results. In January, the company reported net sales of $19.51 billion, an increase of over 9% compared to the previous year’s figures. This financial success has led to planned expansion, with six new stores opening across the country, which will push the total number of locations to over 900 worldwide. As of now, Costco operates 897 warehouses, with the majority (617) located in the U.S. and Puerto Rico. The company also has locations in Canada (109), Mexico (41), Japan (36) the U.K. (29), Korea (19), Australia (15), Taiwan (14), China (7), Spain (5), France (2) and one each in Iceland, New Zealand and Sweden.
Amidst this success, Costco has faced some challenges, including issues surrounding the nationwide egg shortage. Some customers have expressed frustration over the company’s handling of the situation. Reports have emerged of buyers seeking refunds for eggs after finding cheaper alternatives, as well as instances of purchase limits and long queues due to supply constraints. The egg shortage has been driven by a recent bird flu outbreak, which has caused prices to reach record highs in the U.S.
