How Growth Happens: CostCo Edition
By Bryan Caplan
Normally I ignore self-congratulatory corporate publications, but for CostCo, I’ll make an exception. There’s a fascinating story about their Kirkland Signature brand in the latest CostCo Connection. See economic growth at work: How their product designers identify high-quality competitors, and figure out how to make them a little better and a lot cheaper. (Hint: Packaging, transportation, and shelf space all figure prominently). See reputation at work: CostCo doesn’t just improve products; it figures out where the competition is cutting corners – and then boldly makes its products with their corners intact.
This article reminds me of a question I often have at CostCo: Imagine the old Soviet Union gave up on manufacturing, specialized in natural resource extraction, and invited CostCo to set up 10,000 warehouse stores in the Evil Empire. I think it’s clear that this would have been a massive improvement for Soviet consumers. But how much of a difference would it have made? Would a USSR that swallowed its pride and outsourced its brain work and customer service still be around today?