4 Things We Learned From Costco CEO Craig Jelinek

Image courtesy of (Joel G Goodman)

Costco warehouse stores are big, gray, and decidedly un-sexy, but that has not stopped the wholesale club from attracting shoppers, including some who talk to their friends about Costco the same way you might talk about must-read book. 
In an in-store interview WSB-TV, Costco CEO Craig Jelinek — a 32-year veteran of the company — talks about why he thinks his stores appeal to shoppers who are willing to may more than $50/year just for the privilege of walking through the doors with a huge shopping cart. Here are a few takeaways:

1. KEEPING OVERHEAD LOW
The cost of operating a bricks-and-mortar business can skyrocket with rent, renovations, displays, and other traditional elements. At Costco, Jelinek subscribes to a less-is-more mantra.

“All you see is merchandise,” Jelinek tells WSB-TV. “That’s what we do, we buy and sell merchandise.”

Instead of equipping stores with pricey floors, the company just makes sure they’re clean. And instead of displaying clothing on mannequins, apparel is pinned up or folded on minimalist displays.

2. HAPPY EMPLOYEES
While there are plenty of employees to help customers check out, stores aren’t overstocked with workers.

Sure, it might be difficult for a customer to find an employee to answer questions in the store, but Jelinek says there is plenty of assistance for customers who are purchasing big-ticket items like televisions, prescriptions, or jewelry.

Additionally, by having fewer workers, those that are employed make more money. For instance, most employees start at $13/hour, then jump to $23 to $24/hour within four years.

3. ROTATING PRODUCTS

One knock on warehouse clubs is that, while you can often buy products at a discount, you probably have fewer options. Jelinek says that Costco tries to keep things interesting by rotating products in and out of circulation.

For example, during the interview with WSB-TV, Jelinek pointed to a table of baked goods, noting that in about four months a different kind of bread would be available.

“People get burned out on things,” he said.

4. FINDING THE DEALS
Costco’s store-branded products — sold under the Kirkland name — often take front stage at stores, and for good reason.

The goods are sold for a lower markup than other products and are often similar or better quality. In fact, in some cases — like the Kirkland batteries made by Duracell — the store-brand products are actually coming from the brand-name manufacturers.

Jelinek also suggested that customers become acquainted with the store’s pricing policies.

As we’ve mentioned in previous posts about the “Costco code,” products marked with a price ending in “.97” indicate that the company didn’t make a good buy, and that it’s been marked down from its original price. Those ending in “.00” are discontinued items, meaning they won’t be available again anytime soon.

For more on Jelinek’s interview and insight into the retailer checkout the full report on WSB-TV.

Costco CEO shares tips with Clark Howard to help you save money [WSB-TV]