The Warehouse Club Concept (1976-1983)
The warehouse-club format was pioneered by retailer Sol Price. After being pushed out of FedMart, a discount chain he had built earlier, Price and his son Robert opened the first Price Club in 1976 in a former airplane hangar in San Diego. The idea was to sell a narrow range of merchandise in bulk, in a spartan warehouse setting, primarily to small businesses that paid an annual fee for the right to buy at close-to-wholesale prices.
The concept kept costs and prices low by stripping away nearly everything conventional retail took for granted: few product varieties, no elaborate displays, minimal staff, and almost no advertising. Membership fees, rather than steep markups, became a core source of profit. This template proved highly influential and directly shaped the retailers that followed, including Costco. One of the people who learned the business under Sol Price was James (Jim) Sinegal, who had worked for Price going back to the FedMart era.
Founding and the First Costco Warehouse (1983)
Costco was founded in 1983 in Seattle by James Sinegal and Jeffrey Brotman. Sinegal brought deep operational experience from his years working under Sol Price, while Brotman was a Seattle attorney from a long-established local retailing family. The first Costco warehouse opened on September 15, 1983, on 4th Avenue South in Seattle.
The early warehouses stocked only a few thousand items and did not advertise, passing the savings on to members who paid a modest annual fee. Initially oriented toward small-business buyers, Costco offered goods at a small markup over wholesale. Growth was rapid: additional warehouses followed in the Pacific Northwest shortly after the first, and the company expanded internationally within a few years, opening in Canada in the mid-1980s. Costco became the first warehouse club to reach $3 billion in sales in under six years.
The 1993 Merger and Naming Path (1993-1999)
For roughly a decade, Costco and Price Club were the two dominant players in the warehouse-club category. In 1993 they combined in a merger valued at around $2 billion, creating a company originally named PriceCostco, Inc. The combined business operated hundreds of warehouses and generated roughly $16 billion in annual sales.
The partnership between the two families was short-lived. In 1994 Sol and Robert Price departed to pursue separate ventures. The company's identity then shifted through a series of renamings:
- 1993: PriceCostco, Inc. is formed by the merger.
- 1997: The company is renamed Costco Companies, Inc.
- 1999: Effective August 30, 1999, it becomes Costco Wholesale Corporation and reincorporates in Washington state.
The company also relocated its headquarters, settling in Issaquah, Washington, where it remains.
The Membership Model and Kirkland Signature
Costco's business rests on its membership model. Rather than earning most of its profit from product markups, the company keeps prices low and derives a large share of operating income from annual membership fees. This aligns the company with member value: keeping prices down drives renewals, and high renewal rates sustain the fee income. In fiscal 2025, member renewal rates were roughly 92 to 93 percent in the U.S. and Canada, and membership-fee revenue reached about $5.3 billion.
In 1995, Costco consolidated its various store-brand products under a single private label, Kirkland Signature, named for the company's then-headquarters city of Kirkland, Washington. The strategy was to offer products meeting or exceeding the quality of national brands at lower prices, using Costco's scale and buying power. Kirkland Signature grew into one of the most valuable private-label brands in the world, accounting for roughly a third of Costco's sales.
International Expansion
After entering Canada in the mid-1980s, Costco steadily expanded abroad. It moved into Mexico, the United Kingdom, and several Asian markets over the following decades, adapting its warehouse format to local tastes while keeping the core model intact.
By fiscal 2025, Costco operated warehouses across 14 countries on multiple continents. Beyond the United States and Canada, its markets included Mexico, the United Kingdom, Japan, South Korea, Taiwan, Australia, Spain, France, China, Iceland, Sweden, and New Zealand. Canada remained its largest international market by warehouse count, and Asian markets such as Japan, South Korea, and Taiwan became important growth engines. International warehouses often draw very high traffic, and successful new-country openings have repeatedly set membership and sales records.
Leadership Transitions
For most of Costco's history, Jim Sinegal served as chief executive and set the company's low-margin, member-first culture, while co-founder Jeff Brotman served as chairman of the board. Sinegal stepped down as CEO at the start of 2012 and was succeeded by longtime executive Craig Jelinek. Sinegal remained on the board until January 2018.
Jeff Brotman continued as chairman until his unexpected death on August 1, 2017, at age 74. In late 2023, Costco announced its next CEO transition: Craig Jelinek would step down, and Ron Vachris, a career Costco executive who had risen from a forklift operator and warehouse roles to president and chief operating officer, would become chief executive effective January 1, 2024. The succession reflected Costco's long-standing preference for promoting leaders from within.
Modern Era (2020s-2025)
In the 2020s Costco remained one of the world's largest retailers and a favorite of investors for its consistency. Fiscal 2025 marked another year of records. The company opened net new warehouses to reach roughly 914 warehouses worldwide, served more than 80 million paid memberships (with around 145 million total cardholders), and reported net sales approaching $250 billion.
Throughout this period Costco stuck closely to the formula it has followed since 1983: a limited selection of goods sold in bulk at low margins, a heavy reliance on membership fees, an aggressively priced private label in Kirkland Signature, and a culture that emphasizes value to members and relatively strong pay and retention for employees. That discipline, more than any single product or market, has defined the company's long-running growth.