HistoryLink: First Costco discount warehouse opens in Seattle on September 15, 1983

Photo courtesy Costco

By David Wilma

HistoryLink.org Essay 3609

On September 15, 1983, the first Costco discount warehouse opens on 4th Avenue S in Seattle. The warehouse offers food, appliances, clothes, office supplies, and other goods at prices below general retail levels. The company is headquartered in Issaquah.

The warehouse concept was pioneered by Price Club in San Diego in 1976. Jeff Brotman and former Price Club executive Jim Sinegal founded Costco and offered small businesses, such as restaurants and gas stations, the opportunity to buy a limited variety of food, tires, cosmetics, and other goods at 8 to 9 percent over wholesale. 

Later, the market was expanded to include retail customers. The self-service warehouses offered only about 4,000 items and didn't advertise. Members typically paid a $25-$35 annual membership fee.

Costco earned lawsuits from manufacturers by diverting cheap product lines intended for overseas consumption, such as clothing and bicycles, and stocking them in warehouses. Customers will often see a single brand of an item, which might change before their next visit.

In 1993, Costco merged with Price Club.

The first store was just a warehouse with a hot dog stand in front. In 1997, stores featured food courts, pharmacies, optical departments, photo processing, a mail-order business, health-care plans, home insurance, and a car-buying program for its members.

Sources:

"Seattle-based Costco Plans To Sell Shares," The Seattle Times, September 15, 1985, p. D-5; Lee Moriwaki, "Costco: The Empire Build On Bargains," Ibid., July 20, 1997, p. A-1; Lynn Asinoff, "A Special Background Report On Trends in Industry And Finance," Wall Street Journal, August 15, 1985, p. 1; "Investors Overview," Costco website (www.costco.com).