A Brief Look at Costco

1401 WordsJan 27, 20186 Pages
Overview The North American Wholesale Club industry was a $155 billion business in 2011 and was dominated by three focal competitors: Costco Wholesale, Sam’s Club and BJ’s Wholesale Club. Although there are key differences in their business models all three operate as a no-frills, self-service retail experience with a wide selection of products (big box) at very low prices to fee paying members. Five Forces Analysis of the competition in the North American Wholesale Club Industry • Rivalry among Competing Sellers The strongest force facing the Wholesale Club Industry is fierce competition from internal rivals. All incumbents have a similar product mix and there are not a lot of options to differentiate from the competition. It is not only very competitive between the three main clubs competing for market share, but the industry also competes against discount retail outlets such as department stores, grocers, insurance providers, optical, gas stations and other outlets. Focusing on the primary three competitors within the industry the rivalry for buyer patronage is high due to the following main points:  The majority of products offered by industry members are commodities and are weakly differentiated which increases rivalry.  Switching costs are low. Businesses and household buyers can easily switch their memberships to another wholesale club. Also, the added competition of discount retail outlets that may offer a greater selection and convenience a higher number of
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