Costco CEO Ron Vachris: AI won’t replace choices

AI won’t – Costco CEO Ron Vachris says the retailer uses AI to assist employees—not to replace them—and drew a line at handing over key buying decisions. Speaking at the Economic Club of Chicago two weeks ago, he argued AI is already complementing Costco’s workforce of 3

Two weeks ago, Ron Vachris stood on a Chicago stage and tried to calm a fear that’s spread through break rooms and boardrooms alike: that artificial intelligence will quietly take jobs.

At the Economic Club of Chicago. the Costco CEO pointed to a workforce of 341. 000 and the retailer’s growing business as proof of his approach. Costco. he said. has used AI across multiple parts of the company. and the payoff has been “extremely good” as an assistive tool—one that supports employees rather than replacing them.

Vachris described how that help has shown up in real departments. In the pharmacy sector, Costco has seen an increase in sales. He also said AI has worked in a complementing role in Costco’s gas stations and in the accounting department. and that it has been used in some areas of IT—“It was writing some code.”.

When the discussion turned to layoffs—something executives across industries have tied to automation and restructuring—Vachris offered his own interpretation of what the company is doing. “AI has been extremely good for our company in an assistive nature,” he said. “What we found is it has worked very well complementing our employees and the systems that we put in place in the pharmacy. in our gas stations and in the accounting department that we have—and also in some of our IT. It was writing some code.”.

His argument wasn’t that AI has no impact. It was that the impact is supposed to lift people into higher-value work.

“We’ve not displaced people because now the business is growing at a faster rate,” Vachris said. “But those employees that were doing those tasks before have now elevated up to more of a forward-thinking role.”

He drew an even firmer line when asked about how much decision-making should belong to machines. “I don’t see AI making choices on items for Costco,” Vachris said. “I don’t know that we’ll ever take that out of the hands of a skilled buyer.”

In his view. Costco’s evaluation of what the retailer sells is tied to human judgment and experience in a way that AI can support but not replace. “AI won’t be doing evaluations with our employees. ” he added. while insisting there is still a “great place for developing AI systems” that can make the company “a better company.”.

Vachris isn’t a typical AI skeptic. He built his path inside Costco from the ground up, driving forklifts before eventually operating the retail giant. Today. Costco is a business with more than $275 billion in annual revenue. and his leadership message appears to be landing with investors and members at the same time.

As of last year, Costco had 81 million paying members, and Vachris said the retailer is running a 90% renewal rate. Costco’s market capitalization is more than $440 billion, and shares are up 17% this year.

The company’s internal stability is part of the same story. Vachris said 55% of employees have been with Costco for more than five years, and he framed that long tenure as evidence that the corporate culture still feels like a place where people can grow.

“Our number one competitive advantage is our people,” Vachris said. “It’s the best competitive advantage we have over anybody else in the industry.”

That culture also shapes how he leads. When asked about his leadership style, Vachris said his rule is simple: be himself. “I’ve learned so much from multiple people in the organization. it really comes down to. you got to be you. right?” he said. “I’m gonna be me with the attributes of all the things that I’ve learned over the years and the strengths and the responsibility of taking care of our company and continuing to grow it and taking care of our employees. When you try to be somebody else, in my opinion, people see right through that.”.

For all the talk about algorithms and automation, Vachris’ message landed on something familiar to customers: Costco isn’t treating AI like the center of the universe. He even pointed to priorities that keep the shopping experience distinctly human—like $1.50 hot dogs sold by human employees.

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