Costco 2011 Annual Report Download - page 14

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Labor
Our employee count approximated:
2011 2010 2009
Full-time employees ..................... 92,000 82,000 79,000
Part-time employees .................... 72,000 65,000 63,000
Total employees .................... 164,000 147,000 142,000
The numbers for 2010 and 2009 exclude approximately 9,000 individuals who were employed by
Mexico at the end of those years. Approximately 13,600 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 over 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 global, national and
regional wholesalers and retailers, including supermarkets, supercenter stores, department and
specialty stores, gasoline stations, and internet-based retailers. Competitors such as Wal-Mart, Target,
Kohl’s and Amazon.com 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 types of 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.
Certain jurisdictions have enacted or proposed laws and regulations that would prevent or restrict the
operations or expansion plans of certain large retailers and warehouse clubs, including us, within their
jurisdictions. If enacted, such laws and regulations could have a material adverse affect on our
operations.
Intellectual Property
We believe that, to varying degrees, our trademarks, trade names, copyrights, proprietary processes,
trade secrets, patents, trade dress and similar intellectual property add significant value to our
business and are important factors in our success. Our failure to continue to develop, maintain, and
protect these properties would adversely affect our business and financial results. We have invested
significantly in the development and protection of our well-recognized brands, including the Costco
Wholesale®series of trademarks and our private label brand, Kirkland Signature®. We believe that
Kirkland Signature products are premium products offered to our members at prices that are generally
lower than those for national brand products and that they help lower costs, differentiate our
merchandise offerings from other retailers, and generally earn higher margins. We expect to increase
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