ISSAQUAH, Wash. — “The salmon story” is one of the anecdotes Jim Sinegal, president and chief executive officer of Costco Wholesale Corp., likes to tell to illustrate how the company strives to enhance the quality and value of what it sells.
“When we started selling seafood, we sold it fresh, on ice, but we were not very good at it, and it wasn't working,” he told SN, “so we decided that if we were going to sell seafood, it should be packaged. One of the first items we sold was salmon fillet, trimmed but with the skin on, for $5.99 a pound.
“Then we started looking for ways to improve it, so we trimmed it closer and reduced the price to $5.29 a pound. Then we removed the skin and all the bones and sold it for $4.99 a pound. When we were able to begin purchasing in volume direct from Chile and Canada, we lowered the price again to $4.79 a pound, and we held that price when we removed the belly.”
By June 2004, market conditions allowed Costco to sell salmon for $4.39 a pound, “so not only were we offering a vastly superior product to customers but we were also doing so at a better price,” Sinegal pointed out.
“Our goal at Costco is to run every aspect of the business like that.
“As a result, when buyers in any category are able to improve the offer and lower the price, they come to me to tell me their version of the salmon story.”