Costco Is A Membership Warehouse Club

Costco has a simple strategy for being one of the leaders in the wholesales, which is concentrating on driving sales. If the sales of a company are good than everything else will take care of itself. While other companies such as Wal-Mart, Target and BJ’s pour money into marketing; Costco has a no-frills approach and doesn’t advertise. Costco focuses on selling fewer items which increases sale volume and

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)

Costco does not have distributors or retailers to supply its products to the end users. They do, however, have reseller who buy their products for their business and sell to the end user. For example, Costco’s business membership offers tax-exempt purchases to restaurant and small grocery store owners; they then sell those purchased goods to the end user.

The first warehouse store was opened in 1976 by Price Club which was founded by Sol and Robert Price in San Diego, California. Initially it was open only to Business shoppers. By 1983, Jim Sinegal and Jeffrey Brotman created Costco and open its first membership warehouse in Seattle, Washington on September 15, 1983. Within the first three years Costco had opened 17 more warehouses in other locations, had 1.3 million members, and 3,740 employees (Costco, 2014a). Costco expanded

It was in the twentieth century that the world was first introduced to a now well-known household name, Costco. In 1976 that the first Costco was opened, formerly known as Price Club, in San Diego. The philosophy of this company is simply stated, “Keep costs down and pass the savings on to our members.” (Costco.com) It has held onto its philosophy of keeping prices low for almost half a century. Costco is self defined as a “membership warehouse club.” (Costco.com) It provides a wide variety of brand name products in their warehouse-style store, and strives to provide all members with the lowest prices that they can offer. Today, Costco is a well known and loved company by consumers.

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's mission is to “continually provide our members with quality goods and services at the lowest possible prices (Costco Wholesale Mission Statement - Profits and Prices Revolve Around Ethics, 2013)

In September 1983 Costco's first warehouse opened in Seattle, Washington. At this time, warehouse outlets had long existed, but the concept of a wholesale club was relatively new and promising. Dubbed "buyers' clubs" and begun in 1976, these warehouses were wholesalers that required shoppers to become members and pay an annual membership fee. The membership fee helped reduce already-low overhead, so that items could be sold at an average of 9 percent over cost from the manufacturer. At the time Costco was formed, membership warehouses were primarily a West Coast phenomenon; however, since then, their popularity has spread throughout the United States, across the borders to Canada and Mexico, and beyond to many other countries.

Costco started from a single store in Seattle in 1983 to become one of the largest multinational warehouses chain. The story of Costco begins with the exemplary leadership from the co-founders, James Sinegal and Jeffrey Brotman. The cofounders launched Costco with the idea of having a high volume of inventory which they could sell for low cost. In order to provide their items at low cost and also pay their employees well to keep them motivated, Sinegal and Brotman concocted a brilliant idea. The idea was to use the warehouse as itself, meaning that concrete floors, fluorescent lights, and pallets of merchandise are all essential to keep price low and customer happy. Although it does not look visually appealing, the

On September 15,1983 the world had witness the opening of Costco the first warehouse on Seattle, Washington by James Senegal and Jeffrey H. Brotman. The owners had started in distribution their wholesale by working for Price at both FedMart and Price Club and Brotman, an attorney from an old Seattle retailing family, had also been involved in retail distribution from an early age.

All of the inventory orders are completed by the Buying Office of Costco. In some occasions, Costco warehouse have some decision making power when they need extra inventory to meet the demand. Some inventories, such as water, and paper products will ship to the warehouses from the depot on a daily basis. Each warehouse has to meet the sales inventory level target before they receive the next order from the buying office; therefore, the buying office is able to control the inventory levels by forecasting effectively amongst the warehouses. Costco also provides their own brand, Kirkland Signature, which it sells exclusively in its warehouses. There are many product lines, such as office products, grocery, home products, health and beauty, and clothing under Kirkland Signature that makes up about 20% of the total products in the warehouse. Costco uses many suppliers who enable them to provide the required quality and

Craig Jelinek, CEO of Costco, is continuing to build the company’s global presence. He is doing this by concentrating on the expansion of operations in untapped worldwide markets (“Costco’s International Expansion…,” 2015). The strategic move to increase growth has triumphant thus far, with total sales in the recent fiscal years exceed 64 billion dollars (Short, 2013). With this, Costco expects its international operations to account for a large portion of its sales in the future

Brief overview Costco Wholesale Corporation is a wholesale retailer. They are the second largest retailer after Walmart. The company operates in various countries throughout the world, mostly in the North American market. In the retail industry, if you have a wide product mix like Costco a lot of your time will be involved in your inventory management systems. A good inventory management system makes it easy to meet demands of your customers which is key in the retailer industry.

The official Costco’ mission statement is “To continually provide our member with quality goods and service at the lowest possible prices”. This statement shows us what drives Costco and their long-term goal is. They want to sell high quality goods and services to their customers, along with the lowest price of the market. Thus it is easy to understand what why the company strategy is how it is: to generate high sales volumes and rapid inventory turnover by offering member very low prices on limited selection of national brand and select private-label product in wide

​Costco, a discount warehouse based in Issaquah, Washington, specializes in selling quality products at low prices.  The company operates as a membership retailer, focusing its business on small and consumers with incomes averaging $75,000 with over 30 percent having incomes of $100,000 or more annually.  The wholesale club segment of retailing in 2008 was estimated to be a $120 billion business in the United States, and it was growing about 20 percent faster than retailing as a whole (Thompson,