Costco has a brilliant business model, and this slideshow explains the company’s success. I highly recommend clicking the link for a great read.

In this post, I’ve taken some of the information shared in the slideshow and compared it to the field of education. Again, I’d like to reiterate how informative the slideshow is because there’s a lot of data I didn’t include below, but for those who would like some edu-related takeaways–read away.

Let’s start with three facts from the aforementioned slideshow.

  • Costco is the second-largest retailer in the world.
  • Costco’s sales and profit continue to climb.
  • Instead of closing stores, Costco is opening them. (Even with Amazon breathing down its neck.)

Let’s dive into seven of the ways Costco has accomplished this success.

First, “Costco sells a limited number of high quality items in bulk size. The products arrive from suppliers in custom packaging, and are then sold through non-frills warehouses staffed by highly compensated employees… This approach is unique among retailers.”

Think about this: “Costco sells a limited number of high quality items in bulk size.” Costco makes the decision to say “yes” to certain products and “no” to other products. Some of the products that receive a “no” are good, but they’re not good enough. Since Costco can’t sell everything, they have to say “no” to good items that don’t make the cut. From the slideshow: “… customers get one choice of ketchup, one choice of shaving cream, etc.” By doing this, Costco avoids the paradox of choice. Customers don’t feel overwhelmed, and they’re receiving the best value possible.

Takeaway for education: Conventional wisdom states that choice is preferable, but there are a number of benefits for providing a limited approach.

  • People have time to get good at a few important things.
  • People don’t feel overwhelmed, which helps protect and strengthen morale.
  • People have a small number of powerful strategies to wield.
  • Feeling good at one’s job builds efficacy (which paves the way for collective efficacy).

The benefits above are focused on the adults within the organization. How about students?

  • They are provided a curated repertoire of strategies they can use to write papers, solve problems, and think critically.
  • There is a sense of order to what they’re learning, and connections between content areas are highlighted.
  • There’s more depth and less breadth.

Second, “Because Costco carries fewer items, their employees spend far less time ordering from suppliers, coordinating shipping and receiving, paying invoices, stocking shelves, etc. That’s why Costco has the highest revenue and profit per employee of all major retailers.”

Takeaway for education: Time is all-important. There’s no other resource that trumps time. Every initiative, every program, and every meeting is paid for by everyone’s time. When something new is added (and nothing is taken away), everything and everyone suffers. If Costco says, “You know what, I think we should carry two types of fruit snacks,” then they have to cram the extra fruit snacks next to the preexisting brand (which means less aisle space), or they cut some other product from a nearby pallet and place the new fruit snacks in its place.

Educators obviously don’t operate in terms of retail floor space, they operate in terms of time. When a new initiative is adopted, we sacrifice time (i.e. forcing more inventory into the aisle), or we must cut something (i.e. discontinue an older product). Imagine a Costco filled with so much “good” stuff, a customer can’t walk around the warehouse. The number of potential buyers would drastically drop.

Third, “Costco only sell high-quality items.” In this way, customers know their purchase has high value. This means less money is spent on advertising, but it also means customers trust Costco to curate and provide only the best.

Takeaway for education: We must curate what’s used in the classroom and throughout school sites.

I like the word “curate.” Google’s definition is “select, organize, and present (online content, merchandise, information, etc.), typically using professional or expert knowledge.” Of course museums do this, but they also do something that is not included in the definition: they purge. This means after a while, they place certain pieces of art back in storage or send them to another museum. There is not enough wall or floor space for every painting and sculpture; some good works of art need to be retired. The same goes for education. This means if you’re trying to build capacity in NGSS, perhaps you cut something else. You have to pick your battles.

Fourth, “Costco sells products straight off the shipping pallets.” This is cheaper for Costco because it reduces labor costs. Is it pretty? Not in the sense we’ve grown accustomed while we shop. (Although the aesthetic might be pleasing to some.) Be that as it may, this strategy is working for Costco.

Takeaway for education: Selling products right off of shipping pallets isn’t pretty, but it get the job done. Does this mean we need flashy new core and supplemental curriculum, or can we use strategies and texts that have withstood the test of time and been around forever? An understanding of the Lindy Effect can answer this question for us.

Fifth, “Costco stores are cavernous, barebones warehouses–designed to efficiently sell, store, and handle high volumes of bulk-sized items.” Costco knows how much they can sell down to the square foot.

Takeaway for education: Education is different in many ways from Costco’s operations, but is it possible to do something similar to what’s described above at school sites? I don’t think learning per square foot at a school is possible, but it may be in terms of time. So let me rephrase: What is our learning per minute? 

Sixth, “Costco treats their employees well. They pay the highest wages and provide the best benefits in the industry.”

Takeaway for education: The slideshow states that Costco employees make $7 more per hour than Amazon employees and $8 more than Walmart employees. This results in low attrition and access to a better talent pool.

The takeaway for education is simple: treat employees well, and the majority will work harder. Also, our industry will attract the high-quality candidates we need for our students.

Seventh (Conclusion from the slideshow), “For 40 years, Costco has succeeded with a simple formula: reinvest merchandising profits into lower prices and better products; be a disciplined operator; and treat customers and employees well.”

Takeaway for education: Let’s restate the formula for educators: “Our industry must use time effectively by choosing high-leverage and time-tested materials and strategies, be disciplined enough to say “no” to shiny objects and things that are merely good, and treat all adults and students well.”

This seems easy, but as we’ve seen in all industries, oftentimes the simple ideals are the hardest to attain.

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