Costco 's Market And Ahead Of Its Competitors

Costco’s infrastructure skills and capabilities support operations for achieving low cost global leadership in warehouse retail sales and better than industry average. Costco’s culture strives to provide a limited variety of quality merchandise goods from private label and some well established brands.

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)

Descriptive research will be helpful to Costco in deciding to provide items to customers in individual sales. Surveys that are filled out by Costco customers can answer many of the questions as far as which items are in the most demand to be sold individually. Development of a new test instrument can be created to address these new concerns that face Costco on changing its currents sales floor to increase revenues. Through various interviews and questionnaires Costco researchers could produce a long and short list of items preferred by customers for individual sale. Then the company could start planning the implementation of all or just the short list of items as a trial to see if the venture will produce enough revenue to cover the costs of set up.

Costco Wholesale Corporation (Costco), with its subsidiaries operates membership warehouses that offer its members low prices on a limited selection of branded and selected private-label products in a range of merchandise categories.

In this broadcast I was amazed by how Costco was formed and the little secret things that Costco using to encourage people to buy more. Surprisingly that the employee from Price Club left his job, and open his own company, Costco. I first thought that Amazon would sell more stuff than Costco because their social network system which offers free deliver, good deal, more convenience, and various items are offered. However, Costco alone sells more stuffs than Amazon. I found many interesting about Costco. Costco is a giant store with a tiny selection, for example; there is only three options for plastic zip log. This is a key for Costco that they don’t offer many options due to the fact that they don’t want to spend more money on labor part to

The business model of Costco’s is simply to generate high sales volumes and rapid inventory turnover by offering its members low prices on a limited selection of nationally branded and selected private-labeled products in a wide range of merchandise categories. The company’s business model is appealing in today’s market because of the economic downturn we are experiencing. Everyday American’s are looking to make their dollar stretch and Costco’s provide them with a great way to buy in bulk and stretch the consumer dollar to the max!

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 a very unconventional advertising technique, spending $0 in marketing. What they pay in advertising is very little and can be found on their big trucks with a big red, white, and blue Costco logo, yet they are extremely effective at conveying to the public that they exist, and are selling goods to business and non-business consumers at wholesale prices. How do they do it? It’s very commonly known as “word of mouth”, and has effectively made Costco one of the most successful businesses in the world. When asking any common man or woman where someone could purchase goods at wholesale prices, the average answer will likely be “Costco”. There are no commercials, or billboards, or website advertisements, or spam that shows up on search engines. Their greatest advertisements are the enormous stores and parking lots crowded with people trying to do some shopping. Despite the lacking of marketing, Costco is a household name.

Costco is a well-known corporation that has excelled in surpassing customer expectations. The company has gained a reputation for having one of the best return policies in the wholesale club industry. The store offers “complete buyer satisfaction” on all of their merchandise by allowing customers to return items with no specific time limit. The only exception to this policy is Costco’s computer technology based products. These products are covered for up to one year from the date of purchase and can only be returned within that time period.

Costco wholesale is a multi-billion dollar global retailer with warehouse club operations in eight countries. They are recognized as the leaders in the warehousing field. Costco is dedicated to quality in every area of their business and respected for their outstanding business ethics. Costco focuses on selling products at low prices, often at very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Despite their large size and their international expansion, they provide a family atmosphere in which employees thrive and succeed. Costco values its employees and its brands.

Costco’s business model focuses on selling limited selection of products at low prices, often at very high volume and rapid inventory turnover. These goods are bulk-packaged and marketed primarily to large families and businesses. Costco does not carry multiple brands or varieties where the item is essentially the same. It provides members with a selection of only about 4000 items, this results in a high volume of sales from a single vendor, allowing further reductions in price, and reducing marketing costs. Costco also saves money by not stocking extra bags or packing materials; to carry out their goods, customers must bring their own

In 1976, Sol Price, the son of Jewish emigrants, began the first successful warehouse shopping company. He named it Price Club. It was a place where resourceful buying and operating practices gave members access to unrivaled savings. The store started out exclusively for business owners buying at wholesale prices and then re-selling for profit. Previous to Price-Club, Mr. Price owned a grocery outlet in San Diego named Fed-Mart. Fortunately, he hired a 15 year old bagger, by the name of Jim Sinegal. Jim became a protégé of Mr. Price, who was taught by example the workings of owning and operating retail and discount stores. Jim, along with Jeffrey Brotman, a graduate of the University of Washington, started their own business in 1983, on 4th Ave in South

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 will increase its revenue by 15% in the next five years upgrading to the “Executive” membership existing business and qualified members. The increase in revenue provided by the upgrade is almost 100% profit, and will help to provide a strong incentive to clients to save enough through their benefits and purchases to offset the cost of membership. Given that this is a low-margin business, membership fees can account for about 50-55% of operating profits. Over the past years, the sales mix has shifted towards services and away from department store related hard lines and soft lines. While all categories have shown strong growth over the past decade, the services/other category have been the standout. During the next five years, industry revenue is estimated to increase at an average annual rate of 5.2% to $531.5 billion. Growth will occur most likely because of improving disposable incomes, consumer sentiment and business sentiment, all of which act as key drivers for the retail sector. (See Table 1.)

The overall Business Strategy of Costco encompasses ultra-low prices, limited selection of nationally branded and private label products, treasure hunt shopping environment, low operating costs, strong growth and effective HR management (Thompson, 2011, p. C-57). With high sales volumes and fast inventory turnover, Costco is able to maintain good working capital. This allows Costco to be an overall low-cost provider.