Costco 2010 Annual Report Download - page 13

These numbers exclude approximately 2,900 cardholders of Costco Mexico at the end of 2010, and
2,800 cardholders at the end of 2009 and 2008.
Executive membership is available to all members, with the exception of Business Add-on members, in
the U.S., Canada, Mexico, and the United Kingdom for an annual fee of approximately $100. The
program, in the U.S. and Canada, offers additional savings and benefits on various business and
consumer services, such as merchant credit-card processing, auto and home insurance, the Costco
auto purchase program, and check printing services. The services are generally provided by third-
parties and vary by country and state. In addition, Executive members qualify for a 2% annual reward
(which can be redeemed at Costco warehouses), up to a maximum of approximately $500 per year, on
qualified purchases made at Costco. At the end of 2010, 2009, and 2008, Executive members
represented 36%, 33%, and 30%, respectively, of our primary membership base that was eligible for
the program. Executive members generally spend more than other members, and the percentage of
our net sales attributable to these members continues to increase.
Labor
Our employee count approximated:
2010 2009 2008
Full-time employees ..................... 82,000 79,000 75,000
Part-time employees .................... 65,000 63,000 62,000
Total employees .................... 147,000 142,000 137,000
These numbers exclude approximately 9,000 individuals who were employed by Costco Mexico at the
end of 2010, 2009, and 2008. Approximately 13,200 hourly employees in certain of our locations (all
former Price Company locations) in five states are represented by the International Brotherhood of
Teamsters. All remaining employees are non-union. We consider our employee relations to be very
good.
Competition
Our industry is highly competitive, based on factors such as price, merchandise quality and selection,
warehouse location and member service. We compete with 800 warehouse club locations across the
U.S. and Canada (Wal-Mart’s Sam’s Club and BJ’s Wholesale Club), and every major metropolitan
area has multiple club operations. In addition, we compete with a wide range of national and regional
retailers and wholesalers, including supermarkets, supercenters, general merchandise chains,
specialty chains, and gasoline stations, as well as electronic commerce businesses. Competitors such
as Wal-Mart, Target, Kohl’s and Amazon are among our significant general merchandise retail
competitors. We also compete with low-cost operators selling a single category or narrow range of
merchandise, such as Lowe’s, Home Depot, Office Depot, PetSmart, Staples, Trader Joe’s, Whole
Foods, Best Buy and Barnes & Noble. Our international operations face similar competitors.
Regulation
Certain state laws require that we apply minimum markups to our selling prices for specific goods, such
as tobacco products, alcoholic beverages, and gasoline. While compliance with such laws may cause
us to charge higher prices, other retailers are also typically governed by the same restrictions, and we
believe that compliance with such laws currently in effect do not have a material adverse effect on our
operations.
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