Although Costco operates over 580 warehouse stores throughout North America, their location strategy remains relatively unexamined in the economic geography literature. A cursory examination of Costco’s network makes it clear that the firm chooses to locate primarily in the suburbs of major cities, where income levels are somewhat higher than the national average. However, what is not clear is the extent to which other demographic and geographic factors adequately account for Costco’s store locations, and what strategy underlies the geography of the firm’s warehouse stores, especially in relation to its distribution network. This research studies Costco in order to decode the location strategies that have guided the company’s North American and international expansions. The investigation attempts to identify key elements of Costco’s multinational retail network, including this network’s evolution over time. This paper seeks to benefit both retail business and public policymakers by highlighting elements of Costco’s location strategy that have contributed to the firm’s success.

This research focuses on the global expansion of the transnational retail industry. Globalization is a phenomenon experienced by many industries in the present global economy. The global production network (GPN) framework can be used to explain and interpret the phenomenon of transnational firms' adaptation strategies. Due to market saturation in their home countries, retailers began to expand into East Asia in the 1980s. However, cultural differences and legislative limitations created barriers and restrictions for the transnational retailers making this transition. How do firms overcome these challenges? Through a case study of Costco in Taiwan, this research investigates the ways in which retailers adapt their strategies with regard to three concerns: site decisions, product mix selection, and supply network consolidation. The results shows that Costco opted for a strategy of lesser localization in all three domains. This research provides evidence to support this characterization along with examples of Costco's localization strategies via a case study and focuses on the issue of the balance between localization and standardization in the GPN framework.