"Fabulous," says Diane Brisebois, CEO of the Retail Council of Canada, after finding out that Ottawa's CEO of the Year award is going to Louise Wendling, who's head of Costco Canada and a fellow board member of the council.
© Mark Holleron
Costco Canada CEO Louise Wendling.
“She is so deserving (but) I’m sure she’ll be absolutely uncomfortable and embarrassed and will want to hide,” Ms. Brisebois says. “She’s one of those exceptional leaders who does it quietly and who’s uncomfortable with any kind of recognition.”
Ms. Wendling did not hide when notified of the award, instead opening up her office to tell OBJ about how she worked her way to the top of the multibillion-dollar company.
“This was Sam Steinberg’s desk,” Ms. Wendling says, sitting behind it and softly palming the old wood that has become the cornerstone of her office on West Hunt Club Road.
Mr. Steinberg owned a chain of grocery stores across the country, operating mostly in Quebec, called Steinberg. In 1985, he contributed $5 million to Price Club Canada Inc., the warehouse-style company that later merged with Costco. Price Club was modelled after a successful U.S. retailer called Price Co. owned by Sol Price, who also put $5 million into the Canadian version of the company.
That second-hand desk became Ms. Wendling’s in 1986 when she joined Price Club.
Previously, she’d been a senior executive at Hudson’s Bay Co. Her former boss, Pierre Mignault, had become Price Club’s president, and quickly determined that he wanted Ms. Wendling on board at the new company.
After initially turning him down, she agreed and was offered any position she desired since there were so few employees. She’d never tried marketing, and decided to begin by building a membership base from the company’s Toronto headquarters.
“I remember sitting on the floor waiting for our second-hand furniture to arrive, in this crummy-looking office, and saying to myself, ‘Oh God, what did I do?’” Ms. Wendling recalls.
At that point, she’d never seen the U.S. model and had no idea how the membership-driven store would operate.
The Canadian company recorded $18 million in sales its first year, Ms. Wendling says. This year, that number will reach $17 billion.
CLIMBING THE LADDER
It didn’t take long for Price Club to realize that Ms. Wendling could handle more than just marketing. She was promoted to head of non-food buying and was soon placed in charge of all purchasing. Next came a promotion to president of the company’s eastern Canadian operations.
When Price Club merged with Costco in 1993, she became country manager of the new company, beginning the CEO role she occupies today.
Initially operating under the name of PriceCostco, the company had 206 locations generating $16 billion in annual North American sales.
Originally, Ms. Wendling and her company believed Costco could support 10 locations across Canada. Today, there are 83, with more opening regularly.
Those grand openings keep Ms. Wendling busy – she has been in her office only two days during the past six weeks.
OUT AND ABOUT
Store openings aren’t the only thing keeping Ms. Wendling on the road.
“I could stay here and look at reports all the time, but it’s not the same thing as being there,” she says. She likes to visit stores instead of eyeballing inventory lists to see if orders are on track.
“It’s a gut feeling, it’s being creative, and it’s not by sticking your nose in a report that you’re going to get that.”
Costco’s markups are a maximum of 15 per cent, compared to Wal-Mart’s 33 to 35 per cent, according to Ms. Wendling. Working with such small margins means employees need to provide helpful service to keep members coming back. Training those workers, meanwhile, is another reason she’s always out visiting stores across the country.
Costco’s head office sits right next to its warehouse on West Hunt Club Road, where Ms. Wendling does her shopping.
“Oh yeah, she walks through the store about three or four times a week,” says shelf-stocker Alex McFarlene, an employee of 10 years. “At first, she can be a little intimidating, but once you’ve been here awhile, (you realize) she’s pretty nice. She keeps everyone on their toes.”
Mr. McFarlene’s favourite part about Costco is that employees can dress as they choose. He wears a bright blue graphic tee underneath his work vest.
Cashier Marc-Antoine, an employee hired in 2005 who prefers not to disclose his last name, says he frequently crosses paths with Ms. Wendling as she does inspections and shops.
“She’s very sharp, very on the ball and always in a good mood,” he says. He’s not surprised she was awarded CEO of the Year.
“She earned it,” he says. “She’s such a sweetheart.”
Aside from the relaxed attire and regular chance to brush shoulders with the company bigwig, Costco also rewards its employees monetarily. A cashier’s annual salary can reach $53,000, including pension and benefits.
“When I was in government, we never treated people the way Costco does,” Ms. Wendling says, referencing her time with the since-renamed Ministry of Manpower and Immigration before working at the Bay.
“(Our employees) built our business,” she says. “They take care of our members and they’re extremely productive.”
REMEMBER THE MEMBERS
It’s not only Ms. Wendling’s employees – of which there are 2,300 in Ottawa-Gatineau – that she reveres, but Costco members as well.
“She’s obsessed with customers,” says the retail council’s Ms. Brisebois. “Costco has become a treasure trove for men and an addiction for women. She really pushed the bar high for other retailers to be able to bring that ‘wow’ to customers.”
This ability comes from Ms. Wendling’s understanding of Costco clients, who are very different from the everyday consumer.
Members are more affluent and better educated than average, Ms. Wendling says, and tend to have families. They buy in large quantities not only because of low prices, but because of the “treasure hunt approach,” as she calls it: one-shot deals they may never see again.
“It instils a sense of insecurity,” she says with a laugh, knowing how ironic it sounds. “Nobody in retail really wants their customer to be insecure, but with us, they’re insecure in the sense that they’re afraid they won’t see it anymore.”
Costco keeps only 3,500 products in stock at once, compared to Walmart Supercentres that hold up to 90,000 items, Ms. Wendling estimates. Costco’s basic necessities remain the same throughout the year, but seasonal and specialty items are rotated and sometimes never return. This means there’s always something new to look at, although there’s a practical reason behind it – the store can’t fit more because it stocks large amounts of each item.
PAY TO PLAY
Today, Costco is a household name, but the model was unheard of when it began.
“You get people to pay for memberships and they walk into a place that looks like a warehouse,” Ms. Brisebois says. “If someone put this in front of you on paper and you’d never seen it before, you’d say, ‘There is no way this is going to work.’”
But it did.
Ms. Wendling says it still gives her pause to see members leaving Costco with shopping carts piled sky-high.
She says she often thinks to herself, “Who would have ever thought it was possible?”
However, as consumers become more retail-savvy and do more research to find the best prices, Costco has had to fight to retain customers paying a minimum of $55 annually for membership.
“If you end up finding something on the Internet for the same quality that’s cheaper, you’re not going to want to keep your membership,” Ms. Wendling says. “You’re not going to pay to shop in a place that won’t give you good value.”
As the impending arrival of U.S. discount store Target looms large over Canadian retailers, Ms. Wendling says she isn’t concerned, although she is paying close attention.
“I’m sure there’s going to be a price war, which is good for the consumer,” she says. “We’re not in the business of putting other people out of business ... We’re in the business of doing what we do better.”
Ms. Wendling’s optimism is on par with market expectations.
In a recent study, marketing consulting firm KubasPrimedia said Costco would be “relatively safe” from Target’s arrival. Only five per cent of survey respondents felt the store would lose “a lot” of sales and 50 per cent said it wouldn’t lose any.
Costco has “a durable reputation for delivering value for money to its customers. It pays to be good at something,” the study reads.
Sears and Walmart are perceived as most at risk, according to the report.
Throughout business discussions, Ms. Wendling often refers back to her family.
“These are my grandchildren,” she says proudly, gesturing to the wall behind her desk covered in black-and-white framed photos.
She has 13 of them from six children. One grandchild was born with a rare genetic disorder called Cornelia de Lange Syndrome.
The limited research surrounding the syndrome is one reason why Ms. Wendling has become passionate about contributing to children’s charities and hospitals such as the Children’s Hospital of Eastern Ontario.
Costco donates one per cent of its profits to charities, mainly the United Way and the Children’s Miracle Network, of which CHEO is a member.
The office lobby is filled with commemorative trophies from those two organizations, as well as from Shriners Hospitals for Children, a series of medical facilities across North America.
Retirement is something Ms. Wendling says she’s begun to think about. At 68, she still works 55 to 60 hours a week. Eventually, she’d like to spend more time with her grandkids and remain active.
“I’d like to keep the mental juices going,” she says, admitting that her “doer” personality will likely prevent her from ever fully leaving Costco behind.
She says she’d like to remain on the board of directors and perhaps continue to work with Journeys Network, a business group for Costco’s female employees.
“I’m so lucky,” Ms. Wendling says. “It’s not just that you’re smart or you have good business sense. A lot of people have that. You’re lucky. Everybody who succeeds has a little bit of luck.”
As Ms. Brisebois predicted, she ducks away from personal recognition and draws attention to Costco’s regional east and west presidents: one began at Costco by driving a forklift, the other by pushing carts. Now, they’re helping to run one of Canada’s largest retailers.
“Everybody contributes,” she says. “People have a tendency to focus on one person and it really isn’t that one person that makes it all happen.”
Ms. Brisebois begs to differ, offering the opinion that Costco would not have been as successful under the reins of anyone but Ms. Wendling.
“Costco is in her veins,” she says. “And Louise is in Costco’s veins. She’ll kill me for saying that. She will. She’ll give me a call. But she has garnered an enormous amount of respect from competitors right across the country.”
SIDEBAR: COSTCO’S TOP CHALLENGES:
1. The pricing disparity between Canada and the United States. Canada has tariffs that the U.S. does not. Many distributors haven’t updated prices as the Canadian dollar has strengthened. As a Retail Council of Canada board member, Ms. Wendling says she’s been working hard to change that. “I understand it still might be 10 per cent more (in Canada) because our dollar varies a lot, but 30 to 50 per cent is unacceptable,” she says.
2. Abiding by provincial environmental policies. Environmental handling fees, or eco fees, vary provincially. “It’s an administrative nightmare,” Ms Wendling says. “We need to have harmonization throughout Canada.”
3. Continuing to motivate longtime employees, as Costco values its low turnover rates.