Costco looms large in race between Barack Obama, Mitt Romney
October 30, 2012
By Warren Kagarise
Pundits claim the presidential contest could hinge on so-called Walmart moms, but another discount chain is often mentioned on the campaign trail, too.
Both President Barack Obama and challenger Mitt Romney embraced Issaquah-based Costco on the stump, albeit for different reasons.
Support from Costco cofounder and former CEO Jim Sinegal allows Obama to highlight a business success in a feeble economy. The affluent Romney’s affinity for Costco allows the former Massachusetts governor to project a more down-to-earth image.
“Costco’s story is the American story,” Sinegal proclaimed to delegates and dignitaries in a September speech at the Democratic National Convention focused on job creation and the economy.
“I think it’s difficult to explain how a lot of macroeconomic issues work to the public, and I think it really helped to have a good example of why certain things will help create jobs,” Atlanta investment manager Jake Huneycutt said in a recent interview. “Costco, I think it really is a great example.”
Huneycutt also wrote a piece last month about Sinegal’s speech for The Washington Times opinion section.
Costco entered the campaign conversation again Oct. 25. Ann Romney led a camera crew from “The Rachael Ray Show” on a jaunt through a cavernous warehouse, and said she can feed 30 people — sons and extended family — for less than $140, or about $4.50 per person, from Costco.
In a “Fox News Sunday” interview aired just before the Republican National Convention, Mitt Romney saluted Costco-brand Kirkland Signature dress shirts and Ann Romney shared Costco shopping tips.
“For Mitt Romney, I think it certainly casts him as more of an everyman kind of rich guy. That’s his big challenge, is to present himself as somebody who people can identify with,” Pam Danziger, president of Unity Marketing and a luxury market expert based in Stevens, Pa., said in a recent interview. “From that point of view, I think it makes a whole lot of sense.”
Richard Galanti, longtime Costco chief financial officer, said the company is “politically nondenominational” but appreciates the national spotlight.
The high-level attention is flattering, and “as somebody once said, it’s like chicken soup — it can’t hurt,” he said.
Sinegal stepped down as CEO in January and handed the reins to Craig Jelinek. Costco employs about 2,700 people in corporate offices and at the flagship warehouse in Pickering Place. The company is the largest employer in Issaquah.
Costco, founded in 1983 by Sinegal and cofounder Jeffrey Brotman, operates more than 600 warehouses around the globe.
“Costco is really an outlier in terms of the way retailers deliver services and deliver products to the customers — and is really appreciated because they lie outside of the norm,” Danzinger said.
‘It’s so straightforward and so simple’
The company also gains attention for employee salaries and benefits more generous than compensation offered by other retailers. Sinegal highlighted the worker-friendly practices in the convention speech.
“Costco in particular, they’ve really been dedicated to paying their employees better and treating them with better standards,” Huneycutt said. “I really liked what he said, but then it also makes me think, well, what he’s basically saying is that the private sector really does create a lot of jobs. That’s not really the message I was hearing for most of the rest of the Democratic convention.”
In the convention speech, Sinegal said the company created more than 116,000 jobs in the United States and expects to add 7,000 more in the year ahead.
Sinegal endorsed Obama for re-election July 23. Obama attended a campaign fundraiser the next day at Sinegal’s Hunts Point home.
The other Costco cofounder, Brotman, also hosted a Medina fundraiser for Obama.
Sinegal defended Obama’s economic policies in a Sept. 5 speech at the Democratic National Convention.
The former Costco CEO said the president supports policies more conducive to job creation than Romney. Sinegal acknowledged the extensive support for Romney among the business community, but said Obama’s plan to invest in education, infrastructure and research makes better sense for business.
In a speech rooted in Costco history, Sinegal highlighted longstanding corporate policies to offer competitive wages and benefits.
“We’re proud that Costco pays the highest wages among our peers, that we provide benefit and health care plans that are second to none, that we’ve grown our business by promoting from within,” he said. “So, we’re not just giving Costco people jobs, we’re empowering them to build careers and support middle-class families.”
Danzinger said the company’s appeal to consumers — and especially affluent consumers — is partially due to the store environment, stripped of frills and shoulder-deep in bargains.
“It’s so straightforward and so simple. It’s because all of the bells and whistles, and all of the marble, and all of the beautiful décor, and all of the sales people come at a price tag for the shopper when they go into a department store or into any other store,” she said. “Costco targets specifically small business owners in any community, because they are the highest earners, and small business owners in particular know all about the cost of doing business.”