Competition Among the North American Warehouse Clubs

714 WordsJan 6, 20183 Pages
Competition among the North American Warehouse Clubs Case Summary In 2010, Costco, Sam's Club and BJ's Wholesale Club were principle competitors in a nearly $125 billion discount warehouse and wholesale club industry. These companies dramatically changed the competitive landscape of retail by offering bargain-priced, broad selection merchandise to the masses through annual memberships. Major and local supermarkets, drugstores, department stores and the like have found it hard to compete with the substantially lower operating costs, advertising expenditures, overhead costs, and volume discounts offered by wholesale clubs. In addition, rapid inventory turnover affords wholesale discount clubs more cash on hand to finance higher percentages of inventory and secure better payment terms from suppliers than competing companies. Thus, chief competition has been within industry. All three warehouses employ a low-cost provider strategy; however, each has also developed ways of differentiating operating tactics and marketing strategies to improve the overall bottom line of the company. Case Analysis All three companies emphasize low prices, excellent product quality and selection, and convenient shopping to pursue top-line growth. Costco focuses its attention on upper scale clientele in more suburban areas, offering more private label merchandise and diversified auxiliary services such as photo centers, auto services, pharmacies and the like. At the core of its business model,
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