Costco Aligns Strategy with Execution

Everything from store layout to staffing decisions serves the company's strategy of selling more memberships.

We’re firm believers that strategy must drive culture, but few companies exemplify it like Costco. According to CEO Ron Vachris, “The most important item we sell is the membership card. Everything we do supports that transaction,” including:

  • Influencing store layout. TVs and appliances—which feature heavy discounts—are at the front of the store, serving as an immediate reminder of the benefits of being a member. Meanwhile, the lack of signs creates a “treasure hunt” encourages members to discover  surprise deals: another tactic that builds loyalty.
  • Determining the product mix. Costco limits the number of brands and sizes available, which assures customers that Costco has already identified the best products available. This often includes, of course, Costco’s own Kirkland Signature brand.
  • Informing staffing decisions. Scanning member cards at the entrance allows managers to determine how many people are in the store and shift more workers to check-out in busy periods. This gets customers out the door faster than they anticipate, creating a better customer experience and building loyalty.

As a result of their strategic discipline, membership has grown 50% in the last eight years and creates two-thirds of the company’s profits. Read more about how this cult brand sets itself apart.

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Costco Aligns Strategy with Execution
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