Why Costco is so loved
Keeping customers, employees and investors happy is no mean feat
In the nearly 40 years that The Economist has served up its Big Mac index, the price of the McDonald’s burger in America has more than tripled. In that same period the cost of another meaty treat—a hot-dog-and-drink combo at Costco—has remained steady at $1.50. Last year customers of the American big-box retailer devoured 200m of them. Richard Galanti, Costco’s longtime finance boss, once promised to keep the price frozen “for ever”.
Customers are not the only fans of Costco, as the outpouring of affection from Wall Street analysts after Mr Galanti announced his retirement on February 6th made clear. The firm’s share price is 430 times what it was when he took the job nearly four decades ago, compared with 25 times for the S&P 500 index of large companies. It has continued to outperform the market in recent years. What lies behind its enduring success?
This article appeared in the Business section of the print edition under the headline "The super store"
Business February 17th 2024
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