Swot for Costco

1856 Words Mar 13th, 2011 8 Pages
Internal Analysis: SWOT
Strengths:
* Positive Business Strategy – The way Costco operates is providing items in bulk at low prices in membership only warehouses. This has caused an increase in sales with the current recession, which also leads to growth during the slow economic times. * Treasure Hunt Merchandising – Costco changes about a quarter of their items to sell regularly. For example, customers may find Ragu one week, and Prego the next, it just depends on who Costco strikes a better deal with. They also offer deals on name brand products that last only a limited time. * High Membership Renewal Rate – In 2007, it was reported that Costco had an 87% membership renewal rate. The company also boasts that it registered a
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The more expensive membership may include perks, but the amount to be a member of Sams Club is only $30, $35, or $100, and offers similar perks.
Opportunities:
* Private Label Growth –. Many warehouse clubs do not offer their own line of private labels for products, but they could potentially be missing out on sales by not offering a generic substitute. Many times consumers will opt for the cheaper brand. * Increase in Online Sales – Costco offers online grocery shopping to the United States and Canada. With the increase in cold weather in certain geographic regions, this could greatly decrease the chances of people wanting to go out in the cold to shop, and possibly increase the chances of ordering online. * Serving Additional Market Segments – With the decrease in the economy, customers are forced to find alternative ways to save money. People who may have never had to deal with issues of saving and looking for low prices may now have to take prices into consideration. This may result in the upper middle class buying in bulk more regularly.
Threats:
* No Plans for Expansion in 2010 – As a result of domestic overexpansion, Costco ended up reducing plans to expand in 2008 and decided to switch their focus to opening new stores internationally in new markets. Due to the economic downturn however, Costco does not plan to open any new warehouses internationally for 2010. For warehouse clubs everywhere, there has been a significant decrease

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