Analysis Of Costco

NAICS code 452910 is the government industry code for warehouse clubs and supercenters.

To quote from IBISWorld, this industry is “made up of large stores that primarily retail a general line of grocery products combined with merchandise items. Warehouse clubs offer customers a wide selection of goods (often in bulk) at discounted prices in exchange for a membership fee that is paid by each customer”. Warehouse clubs offer products like groceries, health and wellness products, apparel, and electronics. Some outlets also include gasoline stations. Supercenters are large discount department stores that also sell perishable groceries. Unlike warehouse clubs, supercenters do not have eligibility requirements for customers. Costco, Wal-Mart,

This is because of the enormous first-mover advantage derived mostly from economies of scale and learning-by-doing that the major three industry players enjoy. Further, a new competitor would find it more difficult to have the same recognition for consistency in pricing and products that Costco has, as the company has been around for decades. The relationships that Costco and its rivals have established with various suppliers and customers are what new entrants would lack. Perhaps more importantly, the incumbents have gained a cost (i.e. price) advantage and would be able to price an entrant out of the market. Therefore, the barriers to a new entrant are

Traders are able to make buying-selling contracts in advanced by comparing they end or selection and approval vendor list in terms of the production competence, price, quality, and delivery ability. Most traders have an on-site audit before making a contract., The range of merchandise selection is greater, meanwhile the number of convenient store locations of these substitute retailers is much greater as well as the prices of substitute retailers may not be quite low. Many consumers are already familiar with and comfortable with shopping at substitute retailers/discounters. Besides, product differentiation is low. And the merchandise that can be purchased at substitute retailers/discounters is quite comparable to the merchandise sold by wholesale