Claudine Adamo has spent more than three decades inside one of the most efficient and admired business models in the world. As Executive Vice President and Chief Operating Officer of Merchandising at Costco Wholesale Corporation (NASDAQ: COST), she oversees the engine that drives more than $260 billion in annual revenue, a market capitalization north of $400 billion, and a membership base exceeding 128 million households worldwide.

Since joining the company in 1992 as an hourly employee, Adamo has risen through every level of the organization to become one of its most influential leaders. Her journey reflects the culture that defines Costco itself — a company built not on marketing or margin expansion, but on operational discipline, trust, and a relentless focus on delivering value to its members.

In this session from the 2025 Sway Minds Summit, Adamo joined Ken Denman, Managing Director at Sway Ventures and Costco board member since 2017, to share the principles that have allowed Costco to scale globally while preserving culture and loyalty. The article below is an editorial interpretation of the key insights and lessons discussed.

To explore the full discussion, including topics not covered here, subscribe to Sway Capital’s YouTube channel and get early access when Claudine Adamo’s session is released.

Scaling with Intention

Costco’s model is disarmingly simple: sell high-quality products at the lowest possible price, charge a membership fee that rewards loyalty, and execute every detail with operational precision. But behind that simplicity lies one of the most complex scaling stories in modern business.

With a gross margin consistently below 15%, Costco defies conventional retail economics. While most competitors chase profitability through markups or advertising, Costco treats efficiency as its highest form of innovation. Each decision is measured against a single benchmark — member value. This philosophy creates a powerful feedback loop: when customers feel they are treated fairly, retention soars, and growth becomes self-sustaining.

Adamo describes Costco’s membership model as the company’s truest product. The annual fee, $65 for Gold Star members and $120 for Executive members in the U.S., generates recurring revenue and aligns incentives across the organization. The structure transforms customers into stakeholders, enabling Costco to prioritize long-term trust over short-term profit.

For investors, this predictability is one of Costco’s greatest strengths. The company’s renewal rate sits near 93% in the U.S. and Canada, a figure most SaaS businesses would envy. Over time, that consistency has produced compounding returns: since its IPO in 1985, Costco’s stock has delivered a total return exceeding 85,000%, outperforming nearly every index in history.

Merchandising as Strategy

At the core of Costco’s success is Adamo’s domain — merchandising. Unlike competitors that flood shelves with options, Costco caps its SKU count at roughly 3,800 products, compared with more than 100,000 at a typical grocery chain. The discipline to say no has become a moat.

Every item earns its place through a process that balances analytics, instinct, and brand trust. Nowhere is this more evident than in Kirkland Signature, Costco’s private-label line that generates approximately $56 billion in annual sales. Kirkland products account for nearly one-quarter of total revenue, yet each new SKU still requires CEO-level approval. The result is a brand that commands near-universal trust, outperforming many national labels on both quality and loyalty.

For entrepreneurs, this is Costco’s most transferable lesson: curation beats expansion. By maintaining scarcity and quality, Costco has built a business where constraint, not variety, is the growth strategy.

Culture as Competitive Infrastructure

Adamo’s rise from the warehouse floor to the executive suite embodies Costco’s internal ethos — promote from within, reward loyalty, and keep hierarchy flat. The company’s median employee tenure exceeds nine years, double the retail industry average, and wages consistently outpace peers. This cultural continuity translates into operational consistency, which in turn reinforces customer trust.

Adamo points to Costco’s “treasure-hunt” shopping experience — the thrill of discovering high-end or unexpected items amid warehouse aisles — as a metaphor for the company itself. Beneath its functional exterior lies a constant drive to delight. Every operational decision, from SKU selection to supplier negotiation, balances efficiency with curiosity.

As Costco integrates technology and e-commerce more deeply, Adamo’s focus remains on using digital tools to amplify, not alter, the brand’s DNA. The company’s digital revenue now exceeds $20 billion annually, yet its online experience still mirrors the reliability and value of its physical warehouses.

Scaling Without Compromise

From gold bars to global expansion, Costco continues to grow with remarkable restraint. Each new market entry or category launch must clear the same cultural and financial thresholds: transparency, trust, and long-term value. The model works because it scales principles, not products.

For investors, Costco represents a rare case study in compounding through consistency. While the broader retail sector fluctuates with consumer sentiment, Costco’s formula — low margins, high trust, recurring membership — delivers predictable cash flow and steady multiple expansion. Its annual dividend has increased for 20 consecutive years, and the company has issued special cash dividends totaling $25 billion since 2012, reflecting a capital discipline that rivals the best in private equity.

The Power of Alignment

Costco’s success is not built on innovation for its own sake but on alignment — between employees and leadership, between value and loyalty, and between growth and integrity. Claudine Adamo’s leadership exemplifies this equilibrium. She has helped steer a $260 billion enterprise that continues to operate with the precision of a startup and the trust of a family business.

For the Sway Minds audience of founders, investors, and operators, her message was clear. Sustainable scale is not about chasing volume but compounding credibility. When culture, discipline, and purpose move in the same direction, growth is inevitable — and enduring.