Top 4 Insights From Costco’s Retiring CFO About Costco Culture

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Costco’s former CFO spent almost 40 years with the company. Read on for his surprising insights about what makes Costco such a good deal. [[{“value”:”

Costco’s longtime Chief Financial Officer (CFO), Richard Galanti, retired from the company on March 15, 2024, after almost 40 years with Costco. In a recent interview with Bloomberg, the retiring Costco CFO shared some interesting insights about how Costco operates and how it keeps prices low for customers.

Many Costco members don’t see Costco as just a store; they really do feel like “members” of a larger club and culture. Costco has a unique company culture and is known for paying employees well and being a great place to work.

Let’s look at a few key points from Bloomberg’s interview with Richard Galanti, retired CFO of Costco, on what makes Costco a great place to shop.

1. Costco “keeps things simple”

In the interview with Bloomberg, Galanti mentioned that Costco “only” carries 3,800 items for sale, not 100,000. And it’s true — you don’t see five different varieties of paper towels or 14 different toothpastes; you get one or two good options, and that’s that. Carrying fewer items on the shelves makes a retail business simpler to operate, and helps keep delivering good Costco deals.

Costco also serves a special role for shoppers by, in a way, “curating” products. Costco doesn’t have many different options for each type of item on the shelves, but you can usually feel confident that the “one choice” it gives you is going to be high quality. Costco relieves you of the paradox of choice; you don’t have to feel paralyzed by choosing from seven different varieties; instead, you can feel confident that Costco is sourcing good products and giving you a good deal.

2. Costco tries to do the right thing

Costco’s retiring CFO mentioned a few examples of the Costco culture that the company leaders try to live by in their business decisions: “Obey the law, take care of your customers, take care of your employees, respect your suppliers…then, reward your shareholders.” He also shared a story from earlier in his CFO career about a situation when Costco could’ve made some aggressive (legal, ethical) corporate tax planning moves, but he didn’t go through with it — because it might have hurt Costco’s reputation.

Instead of trying to maximize shareholder profit as its first priority, Costco has built a business that tries to take care of all the other stakeholders along the way: customers, suppliers, and employees. If Costco is a great place to work, shop, and sell products to, shareholders will likely benefit, too. In a way, Costco culture can be considered an example of “stakeholder capitalism,” where companies work to make a profit, but also take into account the concerns and goals of all the other people, communities, and larger society involved in their operations.

3. E-commerce is only 10% of Costco sales

Costco is not a big player in online sales; the company’s brick-and-mortar warehouse stores are still a big part of its business model. There’s something special about the in-store Costco shopping experience that most people still seem to prefer; you can’t buy a Costco hot dog online or go on a “treasure hunt” on the website in quite the same way.

Retiring Costco CFO Richard Galanti said that Costco has not believed that e-commerce and “buy online, pickup in store” is the right fit for its customers. The company offers online shopping and you can definitely find some great deals from Costco online, but today, online shopping makes up less than 10% of Costco’s total sales. Most people still want to go to Costco in person, and fill their own huge shopping carts.

4. Costco will (hopefully) keep selling its $1.50 hot dog combo

Costco is famous for its $1.50 hot dog and soda combo, which has never had a price increase. When asked what will happen to this beloved Costco snack bar item now that he’s retired, outgoing CFO Richard Galanti told Bloomberg that, “It’s probably safe for a while.”

Bottom line

In his recent interview with Bloomberg prior to retirement, Costco’s CFO shared some surprising insights, not just about numbers and accounting, but about culture and people. Costco members often love Costco as a company — not just for low prices, but for the positive spirit of the place, and for the ways it makes their lives better. If you want to improve your personal finances and your everyday life, a Costco membership could be worth paying for — and it’s only $5-$10 per month, depending on the membership tier you choose!

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