CNBC ORIGINAL REPORTED BY CNBC’S CARL QUINTANILLA TAKES VIEWERS INSIDE THE HUGE AND HUGELY POPULAR CHAIN THAT HAS TURNED THE EXPERIENCE OF WAREHOUSE SHOPPING INTO AN ADVENTURE
ENGLEWOOD CLIFFS, N.J., April 4, 2012—Costco carries an odd, limited combination of goods, never advertises, charges its 65 million members a fee to shop there, and doesn’t mark up any product more than a scant 15 percent. It’s an unlikely business model, except that it works, and spectacularly. Costco – one of the nation’s top three retailers and the world’s largest membership warehouse chain – has thrived by turning convention on its head. Each year, it sells $4 billion worth of produce, nearly $2 billion in televisions, 55 million rotisserie chickens, 2.6 billion gallons of gasoline, and three million pairs of glasses. It has also generated billions in profits and unusual customer loyalty along the way.
On Thursday, April 26th at 9PM ET/PT, CNBC presents “The Costco Craze: Inside the Warehouse Giant,” a CNBC Original reported by Carl Quintanilla that shows how Costco has grown to 600 stores and $88 billion in annual sales, attracting some of the most affluent customers in the business. The CNBC Original documentary also explores a “Costco Effect,” the routine tendency of its members to succumb to the store’s discount-chic lure and spend more than they expect, often buying more than they need.
Quintanilla examines the science behind the Costco Craze and what has turned a place that sells everything from diamonds to dog food into a retail icon. Its card-carrying members include the rich and famous, as well as shoppers on a budget, all of whom return repeatedly for the treasure-hunt thrill of Costco’s constantly changing inventory -- everything from cereal, detergent and paper towels to deeply-discounted luxury items such as Prada handbags and wedding dresses. Costco even sells caskets.
CNBC introduces viewers to Jim Sinegal, the 76 year-old co-founder and recent CEO of Costco, a man who feels passionately about the discounts he offers his customers and the wages and benefits he offers his employees. Sinegal is on the road most of the year visiting every one of the company’s worldwide locations to see first-hand what’s selling and what’s not. Quintanilla catches up with Sinegal on one of his marathon multi-store tours, during which he describes the philosophy behind his formula and the company’s appeal. In January 2012, after nearly thirty years at the helm of Costco, the unassuming and soft-spoken CEO stepped down and handed the reins to Costco’s President Craig Jelinek who says he will continue to maintain the culture Sinegal has crafted.
In Issaquah, Washington, there is a daily ritual of anxious vendors making the pilgrimage to Costco’s headquarters to show their wares. CNBC follows Costco’s head toy buyer and his team through the intense process of narrowing down more than a thousand toys to a relative handful. Toys are an important and growing category at Costco, last year bringing in about $200 million in sales. Viewers also meet Annette Alvarez-Peters, Costco’s expert wine buyer and one of the most powerful and influential figures in the global wine industry. Costco, famous for selling tires and tuna, is also the world’s top importer of high-end French wines, and bottles its own wine under its Kirkland Signature label. The giant discount warehouse puts its same Kirkland brand label on its wine as its toilet paper, and both sell extremely well.
Part of Costco’s appeal may be the strange array of items it offers, from luxury purses to Swiss watches, but the company’s single best selling product is a classic staple – toilet paper. Costco sells more than a billion rolls of it a year – enough to wrap around the Earth 1200 times. Long before it reaches the stores’ shelves, Costco engineers and technicians in lab coats analyze and test it with surprising rigor and exactitude. The company’s obsession to detail may seem like overkill, but Costco sells $400 million worth of toilet paper every year. As former CEO Jim Sinegal says to Quintanilla, “How can you not love your best selling product?”
For more information including slideshows and web extras, log onto: costcocraze.cnbc.com.
Mitch Weitzner is the Senior Executive Producer. Wally Griffith is Senior Producer. Lori Gordon Logan and Oliver Miede are Producers. Ray Borelli is the Senior Vice President of Strategic Research, Scheduling and Long Form Programming.
CNBC’s “The Costco Craze: Inside the Warehouse Giant” will re-air on Thursday, April 26th at 10PM ET/PT.
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