Why Costco Is A Wholesale Club Business

Costco is turning in much higher numbers for total revenue than BJ’s and higher sales than Sam’s. Costco holds 57 percent of the market share while BJ’s has 8 and Sam’s has 35 percent.

turnover, which is made possible by low prices and limited product selection. This business model is appealing for them and has many benefits. Firstly, by setting up the business approach to rapidly

According to the Top 25 Companies for Compensation and Benefits 2014 that was released by Job-hunting site Glassdoor.com, Costco ranked 2th, which was just behind Google. Costco has one of the most competitive benefits packages in the industry. Its employees not only have a full spectrum of benefits, but also may elect coverage for their spouses, children and domestic partners. The company pays a larger percentage of the premiums than do most other retailers, and employee-paid premiums are withheld pre-tax, which means employees get to keep more of their hard-earned money. Costco even runs a website www.costcobenefits.com for its employees to learn its benefits plan.

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

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

As it was mentioned in previous statements, Costco employees receive beyond minimum wage in addition towards health benefits and services. With 401 (k) retirement plans, reimbursement for child care costs and medical expenses, and open opportunities for career advancement, these initiatives, and incentives make it difficult for stakeholders, consumers, and critics to speak negatively regarding the company.

Costco as a company began operations in 1983 with its headquarters in Issaquah, Washington (Costo 1). It was founded in Washington, United States by James Sinegal and Jeffrey Brotman. Brotman comes from a family that had been involved in retail business before the establishment of Costco. Therefore assuming that his background may have prepared him for running Costco

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.

In 1983, The first Costco warehouse location was opened by Jim Sinegal and jeffrey Brotman (Seattle, WA)

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.

Jim Senegal and his team principal are to conquest customer gratifications. The reason why Costco is focusing on dedicate customer gratifications is because they realized that these people want to purchase decent quality products, but they don’t want to spend tremendous money on it. For example, $ 1.50 hot dog with drink is already inexpensive; however, Costco looks for lower-priced to maintain customer by producing its own hot dog factory.

According to Blacktown City Council (2014), Costco Wholesale Corporation operates an international chain of membership warehouses which carry quality brand name merchandise at substantially reduced prices compared to other conventional wholesale or retail outlets. It began its operations in 1983 in Seattle, Washington and later merged with The Price Company in October 1993 operating under the name PriceCostco, had 206 locations generating $16 billion in annual sales (Costco Wholesale, 2015). As of December 2014, the Company operated a chain of 671 warehouses in 43 states, Washington, D.C., and Puerto Rico (474 locations), nine Canadian provinces (88 locations), Mexico (34 locations), the United Kingdom (26 locations), Japan (20 locations), Korea (11 locations), Taiwan (10 locations, through a 55%-owned subsidiary), Australia (seven locations) and Spain (one location). The Company’s online business also operates websites in the U.S., Canada, U.K., and Mexico (Costco Annual Report, 2014).

It's also worth noting that unlike Walmart. Costco's employees are amongst some of the happiest around the world, as they receive one of the highest paychecks in the industry and top-notch medical insurance benefits, which is why the company has one of the lowest turnover rates in the industry.

Costco is the best cost provider in the wholesale club category and the strategy is associated with Costco’s capabilities and resources, which includes; a streamlined supply chain, good supplier relationships, purchasing power, high sales volumes, quick inventory turnover, and excellent customer service. The three vital components of the company strategy are low pricing, limited product selection and high-end products acquired in closeouts and liquidations. While Costco strives to beat the competitors pricing, it also delivers exceptional value in its high-end offerings and customer service, giving consumers more for their money. Given its customers are the most affluent of all the warehouse clubs, with average incomes around $75,000 and this strategy works well for Costco. However, these customers are conscious not only about money but also value for the product, this fact is supported by the members who choose for executive

Although the membership of Wal-Mart’ Sam’s club is cheap that is $45 annually compared to Costco that is $55 per year, but consumers towards subscribe more on Costco with 76million than Sam’s club of 47 million members. But the power of buyers tend to gain by Costco because the buyers has the mindset that although they pay much higher fee, but consumer felt that it is a good investment as they have a good benefit on discounts and extra offer on limited time. whereas the buying power still low among those who living under the poverty line, like 15% from total U.S. population. For this group of people, the retailing for small number of item purchased, Wal-Mart is much preferred than the membership form like Costco and Sam’s club because of fee barriers for very large