The history of Costco: How Jim Sinegal went from grocery bagger to redefining members-only retail

Washington state-based Costco is a relatively young company – despite this, it's one of the largest retailers in the U.S. and has a commanding presence in the global marketplace.

Costco is best known for its unique, membership-based, "pay-to-get-in" business model, which allows it to offer goods in bulk at lower prices. 

The model quickly proved itself popular, as evidenced by the company's rapid growth and massive consumer base – despite only operating from 874 across the globe, Costco currently touts nine-digit membership numbers.

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Here's a closer look at how the company came to be.

Costco's history actually began several years before the company itself was formed. Its earliest predecessor, Price Club, was launched in 1976 by retailer Sol Price, with its first location in San Diego opening its doors that July. 

Price had previously run FedMart, another member-exclusive discount store – one of these locations employed a young Jim Sinegal as a grocery bagger in 1955. 

Quickly finding himself enamored with the industry, Sinegal worked his way up to executive vice president of FedMart, serving in similar capacities for various other retail companies – including the Price Company, Price Club's parent organization – throughout the late 1970s and early 1980s.

Price Club's business model was similar to Costco's – and initially, the company only served small businesses. However, rapid, global expansion only became attainable after the chain opened memberships up to everyday, civilian customers as well.

The first store operated under the Costco label was opened in Seattle on Sept. 15, 1983, by Sinegal and another career retailer, Jeff Brotman. A month later, the pair opened a second warehouse in Portland, Oregon, and by the end of the year, they began operations at a third location in Spokane, Washington.

Sinegal, and by extension, Costco as a whole, became notable in the business world for his unorthodox approach to operations – generally prioritizing customer and employee satisfaction over shareholders' bottom lines.

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"Our operating philosophy has been simple. Keep costs down and pass the savings on to our members," the retailer's website proclaims, while also noting its focus on optimizing its work environment. "By offering fair wages and top-notch benefits, the company has created a workplace culture that attracts positive, high-energy, talented employees."

By 1985, Costco was already being publicly traded – at which point the company was overseeing some 17 warehouses nationwide and employing nearly 2,000 people.

By the end of the 1985 fiscal year, Costco also had 115,000 members – up from 38,000 in 1984. It also proudly boasts its status as the first company ever to grow from $0 to $3 billion in sales in fewer than six years – growth that would've been well underway around this time.

However, it wasn't until 1993 that Costco got its biggest break.

After the Price Company declined an offer to merge with Sam's Club – Walmart's chain of members-only warehouse stores – it instead opted to join forces with Costco. Following the merger, newly-formed PriceCostco now oversaw some 206 warehouses and raked in some $16 billion in yearly sales and became the largest chain of its kind in the U.S.

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After testing a simple rebrand to "Costco" in late 1996, the company officially changed its name the following year, with all remaining Price Club locations also assuming the Costco name.

Sinegal and Brotman remained on Costco's board of directors until recently – Brotman died in 2017, and Sinegal stepped down from his position the following year.

Today, Costco currently employs some 304,000 people across the globe, and touted a staggering 129.5 million members as of November 2023. 

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Costco currently ranks 11th on the Fortune 500 by total revenue, raking in over $248 billion annually and boasting a market cap north of $320 billion.