Photos show what Costco looked like when it first opened in 1983 (2024)

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Jim Sinegal and Jeff Brotman first dreamed up the idea for Costco Wholesale in 1982.

Brotman, who died in 2017, was an attorney who was inspired to open a European-style wholesaler after taking a trip to France.

Brotman told CNN in 2009 that he didn't know Sinegal before pitching him on the idea of a European-style "hypermarket."

"I called around to retail contacts and asked them to list executives who could run such a business. Jim was on most lists. I cold-called him one day and flew to California to meet him," Brotman said.

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Sinegal was a retail executive who'd previously worked under the businessman Sol Price at a warehouse club called FedMart.

Price was a titan in American retail, and a close mentor to Sinegal.

After Fed Mart, Price founded a new chain, aptly named Price Club, in 1976 in San Diego.

Located in an old airplane hangar, Price Club exclusively offered memberships to small business owners.

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Sinegal and Brotman told CNN that they planned to essentially "clone Price Club" when they launched Costco.

A key difference between the brands: Costco would appeal to non-business members as well.

The first warehouse bearing the Costco name kicked off its grand opening with a business show on September 15, 1983.

Company sales in that first year reached $101 million, according to SEC filings.

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Costco offered business owner memberships for a $25 annual fee, while "Group Gold" members could join for $30 a year.

Non-members could shop as long as they paid a 5% surcharge on their purchases.

Sinegal told the Motley Fool that the chain's first 100,000-square-foot warehouse was a "pretty simple facility."

"We didn't have many of the enhancements that we've added to the business since then," he said. "It was clearly a warehouse; an open-beam ceiling and cement floors and industrial steel and forklifts moving around in the facility. As time has gone on, the model has incorporated a lot of new things that we've put into the business."

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A key piece of the business model's strategy was to keep costs low by sharply limiting the number of unique items, or SKUs, that are kept in stock.

Even now, Costco warehouses only offer about 4,000 SKUs, as compared with about 30,000 at a conventional supermarket, or more than 100,000 at a Walmart store.

In 2009, he also told CNN that the "crowds weren't overwhelming" at first, but "business built up" gradually.

Sinegal served as Costco's CEO from 1983 until his retirement in 2011.

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Costco's low-priced, bulk-size offerings ended up catching on with shoppers.

"The original business plan called for eventual growth to about 12 Costcos, primarily in the Northwest, and maybe $80 million in sales per store," Sinegal told CNN in 2009.

Less than a year after it was founded, Costco began to expand across the Pacific Northwest.

Costco's second and third locations werein Portland, Oregon, and Spokane, Washington.

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The growth of Sam's Club – Walmart's answer to the influx of members-only warehouse clubs – also spurred Costco's expansion.

Founder Sam Walton specifically credited Price with inspiring some of his best ideas: "I guess I've stolen – I actually prefer the word 'borrowed' – as many ideas from Sol Price as from anybody else in the business," he said.

"When Walmart announced it was going into the discount warehouse business, we had to compete and grow quickly," Brotman told CNN in 2009.

"That's why we expanded as fast as we did," Brotman said.

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Sinegal told the Los Angeles Times in 1985 that competition from Sam's Club and other Price Club copycats meant Costco needed to act fast.

"We are working to get established in certain markets, to preempt those markets," he said. "That's why we expanded as fast as we did (12 stores in 18 months and six more scheduled this year), and that's the posture you'll see taken by most of the other companies."

By the end of 1984, 200,000 Americans had become Costco members.

Membership fee revenue totaled $1.3 million in the first year, per SEC filings.

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That same year, The Associated Press dubbed both Price Club and Costco as "key players" in the wholesale-retail game.

"It's one of the most exciting concepts to come along in many years that is truly different," said Ronald Loveless, the head of Sam's Club, told the news service at the time.

Sales at Costco rocketed from zero to $3 billion in less than six years — a first for any company in history, according to the company

The company held its initial public offering in 1985, selling shares for $10.

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Just three years after opening its doors, Costco was a $1 billion company, Sinegal told CNN.

At that point, the chain boasted "17 locations, 1.3 million members, and 3,740 employees," according to Costco's website.

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When Sol Price was looking to retire, Price Club and Costco merged in 1993 to become the somewhat unwieldy PriceCostco.

Before the merger, the top three warehouse club chains were mostly regionalized, with Costco in the Northwest, Price Club in the Southwest, and Walmart-owned Sam's Club in the Midwest and Southeast.

The resulting company boasted 206 locations and $16 billion in annual sales.

The first UK location opened that year, followed by the first Asian location in Seoul in 1995.

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Initially after the merger, there was a slight divide between "red" Costco warehouses and "blue" Price Club warehouses.

"When I was a corporate auditor for the company, the first thing the folks at the warehouse would ask me is, 'Are you red or blue?'" a former employee told Business Insider.

In 1997, the company simplified its name to just Costco.

At its 40th anniversary in 2023, Costco had 838 locations around the world, nearly 129 million membership cardholders, $237.7 billion in revenue.