Costco

688 Words Dec 2nd, 2013 3 Pages
COSTCO NOTES COMPANY BACKGROUND
- The idea was created of membership discount store by Sol Price in 1976
- JU Sinegal used to work there however started his own operation called Costco in 1983 o The same year walmart launched their warehouse membership called Sams Club
- 1985- became a public company
- Costco merged with Price Club in 1993 and reached 16 billion in annual sales
- 1997 they changed the name to Costco
COSTCO’S MISSION AND BUSINESS MODEL
- “To continually provide our members with quality goods and services at the lowest possible prices”
- The business model was to generate high sales volumes and rapid inventory turnover by offering members very low prices on a limited selection of nationally branded and select
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ecuted merchanding techniques
- They opened 127 stores in 2005- 08
- Another 20-24 was planned
- Most of the efforts were on the US in States were did they did not have a warehouse
- And metropolitan areas that were large enough to support 2 stores
- 2008- 102 stores outside states (76 canada) (20 UK) (8 Japan) (6 Koreia) (5 Tiawan)
- Costco was a 50-50 partner to open 31 stores in Mexico
WEBSITE SALES
- they operate 2 websites
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WAREHOUSE OPERATIONS
- Costco is able to offer lower prices and better values by eliminating all the frills and costs associated with the conventional wholesalers and retailers
- Warehouses range in size from 70000 to 205000 sq ft
- Since the customers were attracted to them they were never located on prime real estate sites
- The managers displayed a lot of authority o They functioned as entrepreneurs running their own operations
COSTCO MEMBERSHIP BASE AND MEMBER DEMOGRAPHICS
- Attracted the most wealthy customers in discount retailing
- Average income- 75000- with 30% of incomes 100000
- Members were affluent urbanities, living in nice neighborhoods
- They had two memberships o Gold star- were individuals who did not qualify for a business membership o Business- people with a business license o Business membership 50 o Gold star paid 50 which included a spouse card o Executive membership 100
• 2% savings- up to 500
• also merchant credit card processing, small business loans, auto and home

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