Costco CEO Ron Vachris reveals his winning strategy for the legacy retail brand: ‘we can’t get arrogant’

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

Working for Costco for as many years as the produce store has existed (41 years), Vachris has risen through the ranks from within. He has inherited an empire built on hot dogs with a constant $1.50 price tag and the lure of a bargain. Vachris, who took over at the beginning of the year, knows what made Costco a household name (or Kirkland) and isn’t necessarily looking to reinvent the wheel when it comes to the company’s winning strategy.

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

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

He rose through the ranks at Price Club and became general manager, according to Crunchbase. When Price Club and Costco finally merged in the early ’90s, Vachris was in charge of managing the expansion in Arizona, according to Business Insider. And in total, Vachris has spent 28 years in warehouse management positions, according to the company’s website. Most recently he served as executive vice president of marketing.

“The most important item we sell is the membership card,” Vachris told Wahba. “Everything we do supports that transaction.” A card costs between $120 and $60 a year, all based on the appeal of savings. The company is designed to make members feel like they are getting their value back and finding a bargain. Therefore, the company often foregrounds more luxury items at deeper discounts, adds Vachris. It has paid off, as membership has increased 50% since 2016, boosting the retail giant’s profitability.

In fact, although he is now running a multi-million dollar company, Varchirs does not shy away from his past. Rather, it seems as if he is letting his experience from forklift driver to manager to CEO inform what makes the company so successful. And it doesn’t look like he’s going to rest any time soon, with such discomfort he may be able to hold his reins as long as his predecessors did.

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