Jim Sinegal | Costco | Wall Street | Jeff Brotman
The Temple Of Deals
by
Jeff SiegelSinegal does not look like a corporate mogul. He has no plush
office, no aircraft-carrier-size desk set with stacks of financial
reports, no pride of personal assistants, no steely-eyed young men
or determined young women guarding the approaches. Sinegal is a
casually dressed, 67-year-old man who seems not unlike the fellow
who might have run the local men's clothing store when those stores
were commonplace. When he offers me magazine clippings detailing
Costco's successes, he's practically sheepish about it. And what
there is of his office is stuffed full of basketball memorabilia,
including a very rare Bill Russell autograph. There's nary a
spreadsheet in sight.
But never doubt for a minute that Sinegal always focuses on
business - namely, doing business the
Costco way. All sorts of
things make up the Costco way - no advertising and no public
relations department; paying industry-best wages and offering among
the best benefits in retailing (which drives
Wall Street insiders
crazy); refusing to mark up anything more than 15 percent (which
often drives company insiders who are trying to please Wall Street
crazy); even making sure that its parking lots are striped widely
enough to handle the vans, Suburbans, and pick-ups many Costco
customers favor.
"The average shopper is almost always smarter than Wall Street
gives them credit for being," he says. "Everyone assumes consumers
will buy what they're told. We give them a chance to buy what they
want."
That was more or less the plan when Sinegal and chairman Jeff
Brotman put Costco together in 1983. Their idea: Focus on small
business owners who need office supplies, let them buy in bulk, and
save them enough money so they won't mind paying a membership fee
for the privilege. Sinegal and Brotman borrowed from a variety of
sources - European retailing, where the superstore concept was long
established; traditional U.S. retailers like Sears, which knew how
to market house brands like Kenmore and Craftsman; and Price Club,
founded by warehouse club pioneer Sol Price (and whose FedMart
discount chain had once employed a call clerk named Jim
Sinegal).
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