Costco Mission Statement Analysis

Company: Costco Wholesale Corporation
CEO: Ron M. Vachris
Year founded: 1983
Headquarters: Issaquah, Washington, USA
Number of Employees: 333,000
Type: Public
Ticker Symbol: COST
Market Cap (Jan 2025): $465.6 Billion
Annual Revenue (2024): $254.5 Billion
Profit | Net income (2024): $7.37 Billion

Did you know? Costco sells cashews worth over $15 million annually, half of the world’s output. The retailer sources cashews from independent farmers in Africa.

Costco operates membership-only big-box warehouse club retail stores. The company was founded in Sep 1983 by James Sinegal and Jeffrey Brotman. Costco’s mission, values, and sustainability goals drive growth and success. In Q4 2024, Costco announced plans to open 29 additional warehouses during its 2025 fiscal year. The list includes 19 US locations and 10 outside the US. The retailer expanded its international presence with openings in Ogori, Japan; Torreon, Mexico; and Brantford, Canada. [1]

Costco is America’s largest warehouse club with a 62% market share, followed by Walmart-owned Sam’s Club at 31% and BJ’s at 7%. It is also the world’s third-largest retailer, behind Amazon and Walmart. As of Dec 2024, Costco operated 897 warehouses, including 617 in the US and Puerto Rico, 109 in Canada, 41 in Mexico, 36 in Japan, 29 in the U.K., 19 in South Korea, 15 in Australia, and 14 in Taiwan. It has several locations in China, Spain, New Zealand, France, Iceland, and Sweden. The wholesaler also operates e-commerce sites across 4 continents. [2]

Membership fees contribute over 50% of Costco’s profits. The retailer increased its fees in 2024 for the first time in seven years. Costco’s Gold Star and Business membership fees rose by $5 to $65/year, and Executive membership fees bumped by $10 to $130/year. In 2024, Costco generated $254.5 billion in annual revenue, up 5.0% from 2023. Its 2024 net income was $7.37 billion, a 17% increase from 2023. [3]

To understand why Costco is so successful, here is a comprehensive analysis of its mission statement, values, and sustainability goals:

Image Source: Costco’s Revenue

Costco’s Mission Statement

To continually provide our members with quality goods and services at the lowest possible prices.

Here is our analysis of Costco’s mission statement:

1. High-quality products

Costco strives to provide quality goods to its members. It maintains an average inventory of 3,800 SKUs versus 30,000–40,000 products offered by most supermarkets and over 100,000 items at a Walmart Supercenter. The retailer monitors its SKU counts monthly, ensuring it delivers a limited, high-quality selection. Its inventory includes global brands and company-owned private labels like Kirkland Signature.

Product quality is a core component of Costco’s business model. The retail chain refines its inventory annually to meet customers’ evolving needs without undermining quality. In Jun 2023, Costco reintroduced the Combo Pizza and opened a new Kirkland Signature Sushi department in its Issaquah warehouse. Kirkland Signature Sushi is the first sushi station in a US Costco location. The chain plans to expand the Kirkland Signature Sushi department to other warehouses. Costco also discontinued several items in 2024 to streamline its inventory. [5]

2. Excellent customer service

Costco aims to deliver excellent customer service. The company leverages technologies to streamline the in-store experience. In Jan 2024, Costco installed scanners at the entrance of its warehouses. These devices scan membership cards before allowing shoppers to enter and provide real-time in-store traffic. Costco uses the information to open or close checkout lines based on customer numbers and optimize fresh food inventory on shelves to meet the demand. The membership card scanners helped speed up the checkout process and improved service delivery and in-store experience for paying members. [6]

Costco leverages its membership model to deliver excellent member-only services, creating a loyal customer base. The retailer built the best customer experience with membership tiers (Gold Star and Executive) for tailored value. For example, Costco’s Executive members receive 2% cash back on most purchases, exclusive offers, and perks like travel deals. The retailer’s internal data indicates that 91% of Executive members renew their memberships annually. Members enjoy exclusive member-only pricing, increasing their savings on bulk purchases. Costco created seamless shopping experiences with in-store and online integration, ensuring consistency in customer service and convenience across both platforms. Its in-store pickup and delivery services satisfy consumers seeking hybrid shopping options. [7]

3. Affordable prices

Costco is committed to delivering affordable, high-quality products. Although many retailers offer low prices, Costco stands out thanks to its disciplined approach to profitability. The retailer monitors and maintains its average SKU low at 3,800. Then, it enforces a strict 15% limit on markups versus over 25% applied by most retailers. These low markups reduce Costco’s profit margins to around 2%, compared to 4% for Target and 10% for Home Depot. However, Costco can sustain slimmer profits than competitors due to its membership-based business model. “We have one job: reduce the price of what we sell,” said Jim Sinegal, Costco co-founder. [8]

Costco prioritizes affordability, product quality, and disciplined expansion over short-term gains. This business philosophy aligns with the needs of budget-conscious Costco members. For example, Costco replaced its popular Kirkland Signature Chocolate Chips with Nestlé’s Chocolate Chips in 2024. The retailer discontinued its Kirkland private-label item because rising cocoa prices prevented it from offering a competitive price for the product. In 2024, Costco reduced the prices of groceries and essentials. For example, four-pound frozen fruit bags dropped from $14.99 to $10.99, and reading glasses were discounted from $18.99 to $16.99. Costco is committed to offering affordable products. [9]

Costco’s Values

Costco’s values are doing the right thing, respecting differences, contributing to communities, and caring for the environment. The company applies these principles organization-wide to achieve its mission. [10]

Checkout: Costco’s Revenue by Segment

How does Costco implement its values?

1. Do the right thing

Costco values ethical business operations. Since its founding, the company has adhered to the principle of doing the right thing. This value is linked to Costco’s Code of Ethics: obey the law, support members and employees, respect suppliers, and protect communities and the environment.

Co-founder Jim Sinegal cultivated Costco’s corporate culture, prioritizing long-term core values and sustainability over short-term gains. This holistic approach considers the interests of all stakeholders. By adhering to its principle of “doing the right thing” and creating long-term value, Costco has built a resilient business model that counters the ills of shareholder capitalism. [11]

2. Respect our Differences

Costco is committed to building a diverse and inclusive workplace that embraces everyone. The retailer has comprehensive diversity, equality, and inclusivity (DEI) initiatives. In Jan 2025, Costco rejected an anti-DEI shareholder proposal as bad for business. The retailer pushed back against the NCPPR for proposing an evaluation of the risks of maintaining Costco’s DEI roles, policies, and goals. Costco’s board of directors unanimously recommended a vote against NCPPR’s proposal. Diversity, equality, and inclusivity are ingrained in Costco’s DNA. [12]

3. Contribute to Communities

Costco contributes to its communities by supporting children, education, health, human services, and disaster relief. The retailer donates to hundreds of organizations via charitable programs and grants. It supports Special Olympics, Communities in Schools, the American Indian College Fund, Autism Speaks, Muscular Dystrophy Association, Urban League, Boys and Girls Clubs, and Make A Wish. Since 1988, Costco’s campaign for the Children’s Miracle Network Hospitals has raised over $459 million. [13]

Costco accepts donations through the Red Cross link on Costco.com during disasters. Its Charitable Contributions Committee meets quarterly to pick the best programs to support. In May 2024, Costco offered grants of up to $5,000 to nonprofit organizations focusing on children, education, health, or human services. [14]

4. Care for the Environment

Costco believes doing the right thing enables continuous improvement. The company works with global stakeholders and does its part to avoid catastrophic climate change. In Oct 2024, Costco promised to publish a comprehensive deforestation assessment and action plan for its Kirkland Signature brand. The retailer partnered with Green Century to implement this environmental initiative. It plans to adopt time-bound deforestation- and conversion-free (DCF) commitments for beef, soy, palm oil, and wood products. This strategy will help move Kirkland Signature items towards protecting rather than harming tropical forests. [15]

Checkout: Costco’s Competitors

Costco’s Sustainability Goals

Costco believes the world must thrive for its business to succeed. The retailer is committed to doing its part through the Climate Action Plan to help protect Mother Earth. This action plan guides Costco’s sustainability goals and offers a roadmap to reducing carbon emissions. [16]

Costco released its Sustainability Commitment in 2018 and updated it in 2023. The 2023 version highlights the company’s current sustainability goals. [17]

Costco’s sustainability goals include:

Reduce Scope 1 & 2 CO2e cumulative emissions by 39% by 2030 from its 2020 base year.
Operate with 100% clean energy by 2030.
Convert all Costco depot yard trucks from diesel to alternative fuel models by 2035.
Engage suppliers to create responsible, sustainable, and ethical supply chains.
Accelerate efforts to replace in-store lighting with more efficient LED lighting.
Source products with high sustainability standards, like Energy STAR certifications.

How is Costco progressing on its sustainability goals?

1. Scope 1 and 2 Action Plan

Costco’s global strategy to reduce Scope 1 and Scope 2 carbon emissions includes enhancing energy efficiency, purchasing electricity from clean sources, and integrating on-site energy generation systems. The company is deploying electric yard goats to minimize diesel usage and improving its refrigeration systems to reduce the harmful impacts of hydrofluorocarbons and other gasses. In 2024, Costco purchased 23% of electricity from clean sources, up from 19% in 2022 and 21% in 2023. 33 Costco sites enrolled for 100% electricity from clean sources in 2022, 108 in 2023, and 44 in 2024. [18]

2. Scope 3 Action Plan

Costco estimates that its STEP plan will reduce its Scope 3 emissions intensity by 20% by 2030 from the 2020 baseline year. Its Scope 3 Action Plan focuses on cutting suppliers’ CO2, sourcing deforestation-free commodities, and leveraging energy efficiency certifications like ENERGY STAR. In Nov 2022, Costco pledged to set climate targets to minimize emissions across its global value chain. This commitment included reducing plastic in its Kirkland Signature packaging. In 2024, Costco reached an 82.1% waste diversion rate, limiting its Scope 3, Category 5 emissions. [19]