Discover the Secret Behind Costco’s Enduring Success
For nearly 40 years, The Economist has been tracking the price of the McDonald’s Big Mac in America, which has more than tripled. In contrast, the cost of a hot-dog-and-drink combo at Costco has remained steady at $1.50. Last year, 200 million of these combos were devoured by Costco customers. Richard Galanti, Costco’s finance boss, vowed to keep the price frozen “forever”.
Costco’s enduring success has not only won over customers but also garnered praise from Wall Street analysts. The company’s share price has skyrocketed, outperforming the market in recent years. What is the secret behind this success?
Costco, the world’s third-biggest retailer, has a return on capital that is more than twice as high as Walmart’s. Renowned investor Charlie Munger called it a “perfect damn company”. Costco’s business model is guided by the simple idea of offering high-quality products at the lowest prices, achieved by keeping markups low, charging a fixed membership fee, and stocking fewer distinct products, all while treating its employees generously.
2024-02-15 10:59:41
Post from www.economist.com