Competition Among the North American Warehouse Clubs: Costco Wholesale vs Sam's Club vs Bj's Wholesale

The strategic objective of Costco is based on the concept of offering members very low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories while producing high sales volumes and rapid inventory turnover. This rapid inventory turnover, when combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self service warehouse facilities, enables Costco to operate profitably at significantly lower gross margins than traditional wholesalers, discount retailers and supermarkets. (1)

turnover, which is made possible by low prices and limited product selection. This business model is appealing for them and has many benefits. Firstly, by setting up the business approach to rapidly

For operations, Costco's in charge of managing their store brand Kirkland Signature. Since they have domain over that brand, they are better able to control the caliber of their product. They also maintain the packaging assembly-line in order to accomplish the goal of having an efficient shipment arrangements, and low shrinkage rates. This way Costco can have low rates for quality goods. By keeping their operational costs low they can continue to pass the savings onto their customers.

When it comes to warehouse-style club stores, there are really only four names out there: Costco, Sam’s Club, Wal-Mart and BJ’s. This paper will discuss the Costco and BJ’s. The different type of strategies being utilized by each company, the purpose of the financial statements, their Vertical & Horizontal analysis, how each financial rations ties into the two company’s strategies, Solvency & Performance for each company, a SWOT analysis of each company and finally if the expectations of the stakeholders of each company are being met.

Majority of Costco warehouses is located in U.S. and Canada. Therefore, Costco’s financial and operational performance is highly dependent on U.S. and Canadian operations. Within the U.S. it is highly dependent on its California operations, which contained almost third of U.S. net sales. Any substantial decline in California operations could

Costco’s business model is focused on producing high sales volumes and rapid inventory turnover by offering members low prices on a limited selection of national name brands and select private-label products in a wide range variety. Costco is focused in low-cost strategy is concentrated on a narrow buy segment and out competing rivals by having lower costs, therefore being able serve a niche consumers at a lower price. (Gamble, John and Thompson, Arthur (2009)

There are many strengths of Costco’s business. One of the main strengths is customer loyalty. Last year in the U.S. and Canada, the customer membership renewal rate was ninety-one percent. The global customer membership renewal rate was eighty-eight percent. These high renewal rates

Due to the market; bargains were more important to consumers. Fifty-six of Costco warehouses exceeded $200 million in sales in fiscal 2010, and two of these units each did more than $300 million. This rate of revenue is highly attributable to the strong entrepreneurial culture that encourages its employees and management’s teams to be creative and contribute new ideas to allow the company to constantly evolve and improve. It has been well publicized that Costco rewards and compensates its employees well. It is a well oiled machine that reciprocates its success with its customers and employees.

Some of the areas that get affected by global economic circumstances include investment, access to supplies, compensation of employees, hiring of employees, operations, social issues, labor practices, output, marketing, and expansion to new markets. This paper examines the impact of the current global economic and financial conditions on staffing, compensation, operations management, social issues, and labor practices of Costco. The business reality is that the current global economic and financial conditions have not led to cuts in compensation of employees and the slimming down of some of Costco’s outlets as it is the case with other stores such as Wal-Mart. Hiring has also not stalled and labor practices are now being carefully observed to minimize litigation costs. Additionally, contentious cultural and social issues are steered clear of as a way of avoiding any disturbances to an already unpredictable business climate. Costco’s operations management has assumed a leaner outlook with emphasis on quality services from smaller workforces.

Costco has grown from a single location in Seattle, Washington and is now the largest membership based retailer and currently the 6th largest overall retailer in the United States. In 2011, Costco saw a 10% increase in sales and in 2012, Costco is planning on opening 14 new store locations, three of which will be outside of the US. Costco is no longer a small local retailer but now an international company with different threats and opportunities. As the company continues to grow, it is important for Costco to understand the external threats and opportunities that will impact the company in either a positive or negative way. In order understand these forces a SLEPT analysis is used to analyze the social, legal, economical,

Imagine a store that never advertises, has no signs in its aisles, doesn’t bag what you purchase, and charges you a fee just to walk in the door; Costco Wholesale is that shop. The purpose of this report is to illustrate how Costco as a multinational corporation strategically manages its marketing operation across global markets. For research purpose, this report will be focused on Costco wholesale in Japan and USA.

What is Costco’s business model? Is the company’s business model appealing? Why or why not?

Every company and/or organization starts and operates to achieve a single major goal, which is normally included in the company’s mission statement. Setting a goal, however, does not translate into success on its own; it is only the fist step. Understanding market segmentation is the second most important aspect of doing business. “Sellers and advertisers want to be able to determine what the potential market is for their product or service, as well as the best ways to reach potential consumers” (Terrell, 2013). Once a goal is set, an organization first must decide if it wants to operate locally, regionally, nationally, and/or internationally, as the size of the geographic coverage has a large

Costco is the best cost provider in the wholesale club category and the strategy is associated with Costco’s capabilities and resources, which includes; a streamlined supply chain, good supplier relationships, purchasing power, high sales volumes, quick inventory turnover, and excellent customer service. The three vital components of the company strategy are low pricing, limited product selection and high-end products acquired in closeouts and liquidations. While Costco strives to beat the competitors pricing, it also delivers exceptional value in its high-end offerings and customer service, giving consumers more for their money. Given its customers are the most affluent of all the warehouse clubs, with average incomes around $75,000 and this strategy works well for Costco. However, these customers are conscious not only about money but also value for the product, this fact is supported by the members who choose for executive

At the end of 2012, Costco was a successful business, but there are some issues that they would need to deal with. These issues mainly arise from their previous successful ventures as a warehouse wholesale company. The first issue is that Costco has competitors that can actually be and are a threat to their success. Competition allows a company to improve itself and prove its prowess to its customers. However, when a competitor is able to provide the service at a much reduced cost, problems will arise. As for the second issue, it seems that Costco’s efforts to become an international company are moving slowly. They have not reached a point where their US and Canadian warehouses provide a backbone for their finances. Costco’s third issue is that their finances are too reliant on acquiring new members and not on selling their products. If they cannot keep acquiring new members at a steady rate, their financial infrastructure could suffer.