The Untold Truth Of The First Costco

At Costco's first store, which opened in Seattle's industrial south side in 1983, the "warehouse shopping" concept was more than just a concept. Shoppers at the first Costco had to watch out for forklifts as they navigated the 100,000-square-foot cement and steel space (via Motley Fool). Compared to today's stores, the first Costco was bare-bones in terms of what it sold, too. The warehouse had no meat department, produce, bakery, or food court — although a hot dog stand appeared in front of the store in 1985. Hot dogs sold for $1.50, same as they do today. Only later did Costco add film developing, prescription eyeglasses, a pharmacy, rotisserie chickens, and a gas station. As a trove of historic Costco photos shows (many of the images are from 1983), that first Costco did sell TVs, appliances, telephones, and big cardboard boxes of Tide detergent and Alpo dog food (via Business Insider).

Costco has kept costs down in part by not having a PR department. But before opening its first store, Costco bought a full-page ad in the Seattle Post-Intelligencer to explain itself to new customers. "Each member selects his own merchandise," the ad's text read. "Each member carries the merchandise away from the warehouse at his own expense. Each member is their own salesperson. There is no high-pressure selling." 

Costco grew quickly after opening its first store

Back in 1983, people had to meet certain qualifications to be a Costco member. They had to either represent a business or be part of a particular group — a government employee, for example, or a member of a credit union. The annual membership fee was $25 — about the same as today, accounting for inflation (via Business Insider). Back then, the public was unfamiliar with the idea of paying an annual fee to shop in a big, cold warehouse. 

But the Costco model wasn't brand new. It followed the lead of Price Club, a membership warehouse for small businesses that opened its first store in 1976 in San Diego. Costco's founder, Jim Sinegal, was a Price Club executive who left that company to start Costco with Jeff Brotman, according to Business Insider. Costco and Price Club merged in 1993 to create PriceCostco, which changed its name in 1997 to Costco Wholesale Corporation.

Costco grew quickly. Within two years, it had opened 17 warehouses. Within six years, Costco had become a $3 billion company. Costco is now the fourth-biggest retailer in the world (via National Retail Federation). The company's latest financial statement shows $150 billion in sales in 2019, from nearly 800 stores worldwide (via Fintel). Costco makes a razor-thin profit selling bulk items priced just a little higher than the company's cost. Most of its bottom-line earnings come from the $60 and $120 membership fees (via Motley Fool).

The first Costco was torn down and replaced with a new Costco

If you're interested in a Costco history tour, you can shop at the original Seattle Costco location — sort of. You'll find a Costco at the same spot where it all began, but the original warehouse was razed and replaced by a bigger building in 2005 (via Seattle Business). Retail-history buffs also might want to visit the Costco on Morena Boulevard in San Diego, California. That store was once the original Price Club location (via The San Diego Union-Tribune).

One beloved employee connected the old south Seattle Costco building and the new. He wasn't around for the 1983 opening, but Tom Goessman started working in the original store in 1994, saw the new store go up, and continued in his job until 2017 (via The Seattle Times). Tom was one of those employees every customer gets to see — the guy who stands just inside the exit, checking customers' receipts as they leave. He would play a game with customers, trying to guess their total bill from one quick glance at their cart. Over the years, he got pretty good at it. 

Employees at Costco's first store went on to be company vice presidents

Tom also joked and shook hands with everyone who went by. When he relocated to a Costco in Arizona, in 2017, Tom's customer base — more like fan base — missed him dearly. (Tom, who was born in Korea, had polio and moved to the warmer, drier clime of Arizona because it was healthier for him.) After he left, Seattle Costco customers told The Seattle Times Tom had restored their faith in humanity. "He's always happy and funny and I always made it a point to go in his line no matter how long it was, because I needed a dose of Tom," one customer said.

Just as Tom Goessman's customers were loyal to him, Tom was a loyal Costco employee who worked for the company for at least 23 years. It turns out Tom's longevity with Costco isn't unusual. A segment of the TV news show 20/20 reported that employee turnover at Costco was five times lower than at its competitors. Wages and health benefits are better, too. Many employees had been with the company since that first store opened in 1983. "We have guys that started pushing shopping carts out of the parking lot for us who are now vice presidents of our company," Sinegal told 20/20. Look around Seattle long enough today, and you're bound to find a Costco employee who has been pushing shopping carts through the company's stores since 1983.