Costco 2012 Annual Report Download - page 6

Costco’s hearing aid centers offer top quality hearing products (including the highly-rated Kirkland
Signature hearing aid) at prices well below the industry norm. Sales in our 469 hearing aid centers
exceeded $200 million in 2012, an increase of 22 percent from the previous year.
Costco’s gas stations continue to be an integral part of our operation. Gasoline prices were particularly
volatile this past year due to refinery down-times, hurricanes and droughts. Nevertheless, we were able
to continue to offer great prices to our members. Our gasoline sales were up nearly 20% in 2012 – to
over $10 billion. That translates into nearly three billion gallons of gasoline sold in 2012.
Costco’s fresh meat, bakeries, service delis and fresh produce have all become signature departments
within the warehouse. Each of these departments has developed an outstanding reputation among our
members for quality and value, and our buyers continue to improve our product mix in these areas.
With increasing levels of global sourcing, we are able to offer a wide variety of fresh produce
throughout the year. Demand for organic foods is up, and Costco is responding with organics in
produce, poultry and ground beef. Our sustainability program includes supporting sustainable fisheries
and agriculture around the globe.
Costco’s buyers constantly work to bring new Kirkland Signature products to market. Our Kirkland
Signature private label items must meet or exceed the quality of the leading national brands, and must
offer our members the greatest value for their dollar. New Kirkland Signature items in 2012 included a
number of food products, such as Kirkland Signature chocolate chips, organic canned tomato products,
honey, coffee, a variety of new wine and spirits offerings, and several women’s and men’s apparel
items.
Although we continue to expand our Kirkland Signature merchandise offerings, we also continue to
bring our members the latest, most interesting brand name merchandise at exceptional values. This
kind of merchandise not only sells well, but helps to create a “buzz” among our members. In 2012, our
buyers added popular brands like Bose electronics, Calphalon cookware, Tommy Bahama
loungewear, and Tommy Hilfiger men’s and women’s apparel, to name a few.
Costco’s Ecommerce business also grew in 2012. Our electronic commerce web sites
(www.costco.com in the U.S. and www.costco.ca in Canada) generated sales exceeding $2.1 billion.
We introduced mobile apps for Apple and Android devices during 2012, and in early fiscal year 2013
our Ecommerce website was re-platformed – for improved user experience as well as increased
growth capability. Additionally, we added a web site in the United Kingdom (www.costco.co.uk) in late
October.
As our Company continues to grow, we are very cognizant of our responsibility to build and maintain
our business in a sustainable and environmentally responsible manner. In 2012 we continued our
sustainability efforts with a four-fold approach: reducing our carbon footprint (through greenhouse gas
reduction); enhancing our warehouse energy management systems; expanding our packaging design
initiatives; and further developing our recycling and waste stream management systems. We have
reduced the amount of waste we send to landfills through the use of additional recycling and
composting measures, as well as grease recovery systems in our rotisserie chicken operations.
The global impact of our business, particularly in terms of how we manage our extensive supply chain,
is a priority for Costco buyers. The increasing demand for quality goods is such that we can positively
affect how those products are sourced and sustained. We continue working to identify items that can
be significantly improved in both quality and quantity through basic investment in less-developed
countries, with the result that we improve the lives of those involved. For example, Costco works to
build programs with our suppliers and nonprofit organizations on the ground in countries that supply
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