Costco makes changes at glacial speeds. The warehouse club rarely innovates because it doesn't need to.
Its members aren't paying for cutting-edge technology. The company's customers don't need grab-and-go technology, robots taking inventory, or any other bells and whistles. They simply want really low prices from a company putting all its resources into delivering the best value possible.
That's something Costco (COST) -) has succeeded at. The company has been a port in the storm during the covid pandemic and the period of inflation that followed it.
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At a time when many people were worried about money, Costco has stayed true to its mission. It made dramatic moves, like operating its own shipping fleet to continue to offer members the values they expected.
The warehouse club still offers a no-frills shopping experience. While rivals including Target, Walmart, and Amazon have invested billions in digital order fulfillment, Costco has kept its online offerings limited but does offer same-day delivery through its partnership with Instacart.
That's a fairly brilliant solution where Costco's members get same-day service, but the warehouse club does not have to spend any money to offer it. It's another example of the chain's slow and steady, members-first approach.
Now, as 2023 ends, the member-based chain has a huge move planned, but the chain should be able to pull it off seamlessly.
Image source: Xinhua/Ting Shen via Getty Images
Costco has a new CEO
On New Year's Day, longtime Costco CEO Craig Jelinek stepped down. He has been replaced by current President and Chief Operating Officer Ron Vachris. It's a move the company has been planning for quite some time.
"Craig and Ron have worked hand in hand over the last twenty-one months in Ron's role as president and for many years before that. This is the culmination of the long-standing succession plan that Craig has discussed with the board," Costco shared in a press release.
Vachris has worked at Costco for over 40 years. He literally started as a "forklift driver, and subsequently serving in every major role related to Costco's business operations and merchandising activities," according to the release.
Jelinek will stay on in an advisory role through April and plans to remain on Costco's board of directors.
Costco wants to be boring
CFO Richard Galanti addressed the CEO change during Costco's first-quarter earnings call.
"At the end of the day, the reality is we're staying the course. You know, I remember questions were asked 12-plus years ago when Craig became president, and two years later, Jim (Sinegal, Costco's co-founder) retired and Craig became CEO and president — you know, 'who can replace Jim?' and I think the same questions asked today 'who can replace Craig?' and it really is a seamless transition," the CFO shared.
He pointed out that both have had an incredible history with the company.
"You have somebody retiring that's been here 40-ish years and that's been in the business both on operations and merchandising for a successful number of years in both. And you've got Ron who's coming in, who started when he was 17 at a Price Club in Arizona, and he already has his 40-year gold patch, and again, 30-ish years in operations, a year in real estate traveling the world, and then seven, or six or seven, years in merchandising," he added.
Costco stock went on an impressive run in 2023, gaining about 45%. The company will also pay a special $15 dividend on Jan. 12 to shareholders of record as of the close of business on Dec. 28, 2023.
With a market capitalization of $292.2 billion, it is the 25th richest stock in the the Standard & Poor's Global Market Index.
