In March, Brian Gallagher, an editor for the Food section of The New York Times, texted me a question: Did I have strong feelings about Costco?
“You have found one of the few things I have no opinions on,” I replied.
That wasn’t exactly true. I had visited Costco once, about 20 years ago. Outside the store, a location in Brooklyn on the Sunset Park waterfront, people fought over parking spots. Inside, the aisles were so crowded that a passing shopping cart snagged my wired headphones and nearly dragged me down an aisle. It was not an experience I wanted to repeat.
But sometimes the best article ideas hide in plain sight. How many times had I passed a Costco truck on the highway, or seen a logo for Kirkland, Costco’s private brand label, on a T-shirt? This is a company that influences the food we eat, the clothes we wear and the products that fill our pantries. Nearly one-third of all U.S. consumers shop at Costco. Still, I couldn’t tell you more than a few basic facts about it.
Hoping to understand how the membership-only chain — the third-largest retailer in the world — had penetrated the American consumer psyche, I traveled around the country, visiting Costco warehouses and talking with current and former executives. My findings were published in a Times article this month.
The first step in my reporting process was to revisit that dreary Costco in Brooklyn. I had assumed the store had gotten a face-lift in the decades since I was last there. After all, over the past 20 years, Costco has nearly doubled the number of its locations, tripled its membership and increased profits by an astonishing 3,000 percent.
But when I showed up this spring, it looked almost exactly the same. Although the surrounding neighborhood had been gentrified over the past two decades — a Porsche dealership had opened next door — it was still the same old Costco warehouse.
As members who frequent this particular Costco will tell you, it is something of a zoo compared to other locations. (At least one shopper called it “America’s worst Costco.”) The parking lot is still a combat zone, overloaded with minivans where families divvy up their hauls.
Still, I began to appreciate Costco’s no-frills presentation. Yes, the warehouses are austere. Yes, the shopping experience can be stressful. But it comes with a trade-off: As a consumer, you don’t leave feeling exploited or bamboozled. At Costco, what you see is what you get.
I could relate to that retail approach. Twenty years ago, I owned a deli on Atlantic Avenue in Brooklyn. Deli owners can be obsessed with maintaining the trust of their customers, locals who depend on them to open their stores every day; to always stock the staples, like milk and beer; and to keep prices low. If you drop the ball, there’s another store down the block. Costco had figured out that trust with customers was key.
Brian eventually encouraged me to visit a more exotic Costco location in Anchorage. Alaskans live in a harsh environment, and often travel by air or water to buy groceries. As a result, many residents stockpile food and other necessities. The fervor of Alaskans for Costco is renowned, and I wanted to see it in person.
The Anchorage store was mobbed, of course. But aside from a few Alaskan touches — a flock of marauding ravens tried to snag a rotisserie chicken from an unattended shopping cart outside — it looked almost exactly like the store in Brooklyn.
After my visit this summer, I began to consider a bigger question: How was Costco’s retail model sustainable during an age when Americans seem increasingly fed up with big businesses?
If you trace Costco’s roots, the person who most influenced the store was a lawyer from the Bronx named Sol Price, who invented the warehouse retail model in the 1950s. (He founded FedMart and Price Club, early big-box stores; Price Club eventually merged with Costco.) Like many small business owners, he hated credit cards, and liked to interact with customers. In other words, he was old school. So is Costco, which doesn’t have a big media arm — or even a public relations department — which made reporting this article especially challenging.
I traveled this summer to a new warehouse opening in suburban Houston, hoping to speak with executives in attendance. After chasing a few down the aisles, I was finally able to speak with some, though most weren’t very talkative. I left Houston with more questions than answers, including a big one: How did Costco resist going to the dark side, as in, putting profits over its members?
In a world where billions can be made on hype, here is a company with no media relations department, minimal advertising and no “How I Did It” memoirs by former chief executives.
Perhaps all of that is part of its success, and a story worth writing in the future.
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