Costco CEO Ron Vachris reveals his winning strategy for the legacy retail brand—’we can’t become arrogant’

Only three CEOs have held the reins at Costco during the retail giant’s four decades in existence, points out Fortune’s Phil Wahba. And the latest freshman to enter the arena is none other than Ron Vachris, who started working at the membership warehouses when he was just a teenager. 

Working for Costco for as many years as the goods store has been around—41 years—Vachris has climbed the ranks from the inside. He’s inherited an empire built upon hotdogs perennially priced at  $1.50 and the lure of a bargain. Vachris, who took over at the beginning of the year, knows what made Costco a name (or Kirkland) brand—and isn’t necessarily looking to reinvent the wheel when it comes to the company’s winning strategy. 

As he looks to continue to execute the brand’s consistent formula and build out its online presence, Vachris implores everyone to remember where they started off. “We have to stay as focused as we were when we had 200 warehouses,” he told Wahba. “We can’t become arrogant. We can’t become comfortable.” 

At 59, Vachris has dedicated much of his life and his career to Costco. He began his storied relationship with the company at 17 as a forklift driver at a Price Club, a company that would merge with Costco in about a decade. 

He made his way up at Price Club, becoming a general manager — according to Crunchbase. When Price Club and Costco eventually merged in the early ‘90s, Vachris was in charge of managing the expansion in Arizona, per Business Insider. And in total, Vachris has spent 28 years in management positions at warehouses, per the company’s website. Most recently he served as the executive vice president of merchandising.

“The most important item we sell is the membership card,” Vachris told Wahba. “Everything we do supports that transaction.” A card ranges $120 to $60 annually, all built on the lure of saving. The company is built to make members feel like they’re recouping on their value and finding a steal. The company therefore puts more luxury items that are a greater discount often at the front, adds Vachris. It’s paid off, as membership has spiked by 50% since 2016, driving the retail giant’s profitability.

Indeed, while he’s now atop a billion-dollar company, Varchirs isn’t shunning his past. Rather, it seems as if he’s letting his experience from forklift driver to manager to CEO inform what makes the company so successful. And it doesn’t appear like he’s resting any time soon, with said uncomfort he might just be able to hold onto his reins for as long as his predecessors did.

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