Costco 's Main Competitors? Essay

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)

Costco Wholesale Corporation operates an international chain of membership warehouses, which carries quality, brand name

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

Chief elements of Costco’s strategy were low prices, limited selection, and a treasure-hunt shopping environment. The ultra-low pricing strategy includes a mark-up capped at 14% and Kirkland, a Costco brand designed to be of equal or better quality than national brands. Product Selection is limited to 4,000 items within a wide variety of categories. Costco does however include ancillary businesses to increase member alternatives. The loss of sales from customers who refuse to purchase large amounts is considered “Intelligent loss of sales.” Treasure-Hunt Merchandising consists of a constantly changing selection of 1,000 luxury items on the floor enticing shoppers to spend more than

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.

Costco is a recognized and successful retail chain including several locations, glowing feedback, and a wonderful overall reputation. Known by several audiences to be considered a “big-box” store, Costco offers various products in its stores at low, discounted prices, accompanying a membership card. Before and after researching this company, the author of this paper has heard exceptional feedback regarding the company for its initiative to keep prices low, employee morale high, and customer satisfaction to be one of its top priorities. Within this body of work, the author will dissect and discuss some of Costco’s stakeholder perspectives and how some of the perceived initiatives may help aid the company within its

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.

Costco Wholesale Corporation, together with all its subsidiaries, works in a warehouse business. The organization offers branded and private-name items in a scope of stock classifications. It gives dry and institutionally bundled nourishments; confection, tobacco, alcoholic and nonalcoholic refreshments, and cleaning and institutional supplies; machines, gadgets,

“The key elements of Costco strategy are extremely low prices, a limited selection of naturally branded and private label products, a treasure hunt shopping environment, strong emphasis on low operating costs, and ongoing expansion of its geographic network of store locations.” To provide low prices Costco caps its markup on brand merchandise at 14% compared to 20% to 50% at other supermarkets. The equals out to a sales revenue that only equales several million dollars. This number excludes all other operating factors including the membership fees. Another important element of the strategy is that unlike other retailers they don’t offer window displays or any other thrills with in the stores. They know because of the reputation and because of the value that they offer their customers that the items that they sell offer value over all else.

Costco is one of the nation’s top three retailers and the world’s largest membership warehouse chain, Costco wholesale Canada operates about 80 membership warehouse clubs across Canada. The company never advertises, charges its 64 million members to shop there and doesn’t mark up any product more than 15 percent, even at this lowest profit margin, 15% for Kirkland private brand, the products were 20% lower than comparable to other brand products. Costco works with this business model and generating $93 billion in annual sales.

Costco Wholesale Corporation is in an industry where there are several of dynamic competition from huge chains such as Wal-Mart or Sam’s Club and Target, and yet it could maintain a competitive and profitable stance. Effective strategic planning is essential part in operating any business in relation toward adapting to organizational and operational adaptation to changing markets. Through inquiries, the influence in the recent economic trends, provide strategies that have use or could use in the adaptation to changes in the market related to issues of economic trends, such as recession and economic downturn. Costco Company’s research paper will further discuss the tactics that has

The strategy for Costco was that the company continued to buy merchandise at volume discounts from manufacturers, rather than distributors. The stock is usually shipped directly to selling warehouses to minimize freight costs. Stocked items are placed directly onto the selling floor or are still stacked on their pallets, reducing handling and stocking labor. The number of sales and service employees is also minimal, with a large percentage of the employees holding part-time status. Warehouses are almost entirely self-service, from finding and buying items, to loading them into a customer's vehicle. (Miller, 2011)

Wal-Mart operates discount retail department stores selling a broad range of products. It typically stocks basic, rather than premium products. Wal-Mart also operates "Supercenters" which include a full line of grocery items. Wal-Mart also operates Sam 's Club; these are "warehouse clubs" which, like Costco, require membership dues and sell merchandise in large and inexpensive sizes and quantities.

Many of Costco’s strengths are held with their low prices, limited selection, and their employees. Costco prefers to hire from within and focused on career longevity and development for their employees. It was company policy to fill at least 86 percent of its higher-level openings buy promotions from within; in actuality, the percentage ran close to 98 percent, which meant that the majority of Costco’s management team members were home grown (Gamble & Thompson Jr., 2009, p. 226). Even with their many strengths, Costco still had some weaknesses. Their warehouses appeared to be very industrial, with concrete floors and merchandise displayed on wooden pallets. Costco also relied heavily on word-of-mouth advertisement, which saved the

Wal-Mart creates their data center called @Walmarts. They generate data from their customers and operating Wal-Mart’s mobile app, which is their strategy of ecommerce innovation. The local grocery pickup location is Wal-Mart’s strategy on online retailing. They maintain their everyday lowest price to shoppers by using the Wal-Mart mobile app service of Barcode Scanning. The mobile app will help the customer to compare the price with other stores to insure their lowest price; otherwise Wal-Mart will pay the difference. Wal-Mart currently announced their “Shipping Pass” to challenge their biggest online competitor’s Amazon Prime.