Why Costco is so loved

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In my conversations with bosses of retail firms, I usually spend a lot of time talking about growth, margins and the threat from Amazon, the e-commerce giant. But when I spoke to Richard Galanti, the former finance boss of Costco, an American superstore, most of the interview centred on the company’s culture. Mr Galanti talked about how employees are constantly encouraged to “do the right thing” and “keep things simple” in everything they do.

These phrases are not the usual corporate fluff. Costco’s culture explains how it has succeeded by turning the industry rulebook on its head: most of the firm’s profits stem from membership fees, not sales; it stocks fewer, not more, products in its shops; and despite paying its staff well above the industry average, its salary expenses as a share of sales are among the lowest. And it does all this while selling an eclectic mix of items, from giant rolls of toilet paper to rotisserie chickens, saunas and gold bars.

Shailesh Chitnis, Business correspondent

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