Costco as we know it today is made up of the Costco Wholesale Company and a merger with The Price Company in 1993. The Price Company pioneered the membership warehouse concept. In terms of value innovation, this means:

a. The company introduced a new line of products to sell in a retail setting than had previously been offered in the same store together, adding differentiation in the retail industry.

b. The company enhanced the buying experience through differentiation with a higher level of customer service that included plush lounges, speed checkout lines for exclusive members and an always-in-stock guarantee.

c. The company was able to push the efficiency frontier – lowering costs by selling in a warehouse environment and improving value by introducing memberships as a differentiation in the retail industry.

d. The company redefined the retail market and entered into a blue ocean strategy inherently changing the way customers shop for food, clothing, furniture and electronics so that it would not have to compete with anyone.