3 Would you rate Costco's competitive strategy as pursuing differentiation, cost leadership, focus or some combination? Why? In 2010, Costco's reputation for rock-bottom pricing and very thin profit margins helped the company maintain its position as the fourth-largest retailer and the number one membership warehouse retailer in the United States, with 572 stores (425 in the United States), 142000 employees and 55 million members. Sales reached US$76 billion, up 9.1 per cent, reflecting, in part, a unique corporate culture that doesn't just pay lip service to the value of its employees, but maintains a reputation for honouring that value. CEO Craig Jelinek, successor to founder and long-time CEO James Sinegal, believes that the secret to Costco's success lies in the many ways the company overturns conventional wisdom. Despite Wall Street criticism, the company is devoted to a well-compensated workforce and scoffs at the notion of sacrificing the wellbeing of its employees for the sake of profits. Average hourly wages of around US$20 smash those of competitors (US$10-$11.50 per hour). Costco's competitors attempt to improve profits and shareholder earnings by keeping wages and benefits low. As a result, Costco enjoys a reputation of having a loyal, highly productive workforce, and store openings attract thousands of high-quality applicants.