Jim Sinegal
Jim Sinegal co-founded Costco with Jeff Brotman in 1983 after a long apprenticeship in retail. He had worked under Sol Price at FedMart and Price Club. In his own account, the warehouse model drew on several sources: European cash-and-carry stores, hypermarkets and a FedMart distribution center. Costco was an adaptation of a working system, built by people with deep operating experience. Brotman saw an opening for a warehouse club in the Pacific Northwest and sought Sinegal’s help to start and run it. Their first warehouse opened in Seattle. The business aimed to keep costs low and pass the savings to members. Its buying power and a limited selection supported that promise. In 1993 Costco merged with Price Club; Kirkland Signature, its shared private label, followed in 1995. Sinegal described trust in Costco’s value as a central advantage. He also placed employees and suppliers inside the business model. In an original interview, he argued that pay, job security, pride in the company and a path to promotion helped retain people. His stated order was to obey the law, look after members and employees, and respect suppliers, with shareholder returns following over the long run. These are his claims about the system, not proof that every employment or buying decision met them. He served as both president and CEO until 2010, then remained CEO until January 2012. The aim he described was an organization that would last for decades, rather than a quick sale. His record is useful for studying how a clear customer promise can shape prices, product choice, work and succession.
Which books are linked to Jim Sinegal?
These are examples from the documented shelf. Each label describes the connection; a book on the shelf is not always a recommendation.
- Wooden on Leadership by John Wooden and Steve Jamison — Publisher endorsement. Source
Contents
Career highlights
- 1983Co-founds Costco with Jeff Brotman and opens the first warehouse in Seattle.
- 1993Costco and Price Club merge as PriceCostco, with 206 locations in the combined business.
- 1995Costco launches the Kirkland Signature private label.
- 1997The combined business resumes the Costco name.
- 2010Ends his service as company president while continuing as CEO.
- 2012Retires as CEO on January 1.
Lessons for founders
- Learn a working system before you adapt it. Sinegal’s warehouse model drew on Sol Price’s businesses and other retail formats. Know which parts solve real operating problems before you combine them.
- Make the value promise clear on every product. Sinegal said members should expect strong value whenever they see an item at Costco. One appealing offer cannot carry a store full of weak ones.
- Keep the range small enough to buy well. Costco links a limited selection with careful buying and member value. More choice has a cost in stock, effort and purchasing power.
- Build a path that gives people a reason to stay. Sinegal stressed careers, security and internal advancement as well as pay. Experienced staff carry knowledge that turnover can erase.
- Treat supplier health as part of the system. Respect for suppliers was one of Sinegal’s stated duties. A long-term business needs partners that can keep serving it.
- Test the promise each day. Sinegal warned that past success did not guarantee the next year’s customers. Renew the shop’s offer and service instead of relying on habit.
Sinegal’s order of business duties — paraphrased
- Follow the law.
- Look after the members.
- Look after employees.
- Respect suppliers.
- Deliver returns to shareholders over the long run.Sinegal described this as the result of meeting the first four duties, rather than a reason to bypass them.
On the Motley Fool Money podcast
1×Read about them
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Books on their shelf
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Sources
8
- Jim Sinegal — original interview on Costco’s origins
- Costco Connection — Expanding frontiers
- Costco — About and company history
- Jim Sinegal — original 2012 interview, republished by Motley Fool Money
- Costco Connection — A brand above
- Costco — 2011 proxy statement
- David and Susan Schwartz — The Joy of Costco
- James D. Sinegal — Great American Business Leaders of the 20th Century — Harvard Business School