Case Study Of Costco

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Despite the large volume of sales for the store, the company has decided to only care a few brands of each type of product. For examples, Costco carries 4 types of toothpaste, while competitors such as Walmart (NYSE:WMT) can carry upwards of 60. This helps the company drive sales discounts from large quantity order purchases. The company also operates a private label brand to further create price competition and allow Costco to receive higher margins for these private label products.

Costco also sells their product in bulk form. For example, all cereals that are sold in stores come in the largest possible quantity at any retailer. Cereals such as Vector are sold in 1.14kg boxes. Costco can secure more revenue per item purchased, and because they are able to buy so many of a product at once they are able secure a larger margin per item sold.

Additionally, one of the main constraints for Costco in terms of pricing is that no item sold in the store is marked up more than 15%. This keeps costs low for the consumer and ensures that they see the value in paying for membership because they know that the price that they receive at Costco will be lower than anywhere else they may be able to buy a similar product.

Finally, the strategic objective of the company is to focus on low
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The main way that company does this is through paying a premium for their employees to work. Costco employees on average make more money that comparing employees at similar companies. Costco's minimum wage starts at $12 in Ontario, despite the legislated wage of $11 and also adds a $4 premium for work on Sundays. The pay increase structure also rewards employees for the amount of work they have done and the highest amount can be achieved in less than 10 years yielding a wage of ~$27 in Ontario. On average, Costco pays 13% more than comparable

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