Costco 2013 Annual Report Download - page 12

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10
Ancillary businesses within or next to our warehouses provide expanded products and services and
encourage members to shop more frequently. The following table indicates the number of ancillary businesses
in operation at fiscal year-end:
2013 2012 2011
Food Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 628 602 586
One-Hour Photo Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622 591 581
Optical Dispensing Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614 589 574
Pharmacies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565 544 529
Hearing-Aid Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 469 427
Gas Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414 394 368
Number of warehouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634 608 592
Our online business, which operates websites in the U.S., Canada, and the U.K., provide our members
additional products, many not found in our warehouses. These products vary by country and include services
such as photo center, pharmacy, travel, business delivery, and membership services. Net sales for our online
business were approximately 3% of our consolidated net sales.
In general and depending on the country, our warehouses accept cash, checks, certain debit cards, American
Express, or a private label Costco credit card. Losses associated with dishonored checks have been minimal,
as members who have issued dishonored checks are identified and prevented from making further purchases
until restitution is made.
We have direct buying relationships with many producers of national brand-name merchandise. We do not
obtain a significant portion of merchandise from any one supplier. We have not experienced any difficulty in
obtaining sufficient quantities of merchandise, and believe that if one or more of our current sources of supply
became unavailable, we would be able to obtain alternative sources without substantial disruption of our
business. We also purchase private label merchandise, as long as quality and customer demand are
comparable and the value to our members is greater as compared to brand-name items.
Certain financial information for our segments and geographic areas is included in Note 12 to the consolidated
financial statements included in this Report.
Membership
Our membership format is designed to reinforce member loyalty and provide continuing fee revenue.
Members can utilize their membership at any Costco warehouse location in any country. We have two types
of members: Business and Gold Star (individual). Business membership is limited to businesses, including
individuals with a business license, retail sales license or other evidence of business existence. Business
members pay an annual membership fee of approximately $55 for the primary cardholder, and have the
ability to add additional cardholders (add-ons) for an annual fee of approximately $55 each. Gold Star
memberships are also available for an annual fee of approximately $55 to individuals who may not qualify
for a Business membership, however add-ons are not available for Gold Star memberships. All paid
memberships include a free household card.
Our member renewal rate was approximately 90% in the U.S. and Canada, and approximately 86% on a
worldwide basis in 2013. The renewal rate is a trailing calculation that captures renewals during the period
seven to eighteen months prior to the reporting date.