In the current market situation where the economy is constantly on a downfall and people are doing everything that is necessary to reduce cost and save money. Food products and daily essentials are one the major contributors of cost for everyone. Especially younger generation are willing to lead a simplistic and cost effective life style to save money. Despite being the second largest retail chain in the world, 2015. And also one of the cheapest retailer in the market it is finding very hard to attract the Millennials in to their stores. Costco is the largest retailer when it comes to membership only stores and it is estimated that the net income of the company to be around $2.38 billion US dollars (http://www.marketwatch.com/investing/stock/cost/financials). …show more content…
Their business model is aimed at small business and sub urban households. They offer lower prices when you buy in huge amounts. In order to shop at Costco one has to have access to a car in order to carry all those items and also space at home to store those items. But when it comes to younger generation most of them doesn’t have a car and most of them live in shared apartments where there is no place to store these bulk products and even if they find a way to store them, they won’t be in a position to utilize all these products before their expiration date which is also huge factor that forces younger generation to shop some where …show more content…
Costco has to change the way it handles social media and it also should offer benefits according to the demographic of the people. Methodology In this paper we are going to use different methods to understand in detail where the problem lies and what the root causes of the issue. SWOT Analysis SWOT analysis is one of the most widely used technique and most effective technique that can be used to determine the strengths, weakness, opportunities and threats that are associated with in organization. With this we can form a clear idea about what step should be taken to rise to the next level. 1. Strength • It is the second largest retailer in the world. • It has stores all over US and Canada. • It offers wide range of products. • It has good image among the general public. 2. Weakness • Lack of presence in social media • Lack ability to provide lower quantity products • Membership fee • Poor online
Costco’s business strategy is different from their competitor’s in the wholesale retail industry because their purpose is to keep overhead down and pass the savings to their customers. They do this by choosing not to advertise, sell fewer brands and having an innovative approach by having their own manufacturing facilities for a variety of merchandise. Costco does not market their warehouses and their marketing is through word of mouth from current customers who also must have a membership to shop at Costco. When compared to Walmart Costco sells four brands of toothpaste and Walmart sells sixty brands of toothpaste. Costco can buy more for less from the manufacturer of the four brands of toothpaste and pass the savings on to their customers. Costco’s strategy is to sale a limited number of items because this strategy according to (Lutz, 2013) “increases sales volume and helps drive discounts.” Because of Costco’s profitability in the retail market they have managed to continue to be profitable even in an oppressed economy. Costco’s focus is on high-end customers indicated by some of the brands they carry such as Coach Handbags. Costco offers three different levels of membership and is only open to customers who have a membership. Costco’s philosophy is they do not advertise or markup items more than 15% in order to save their customer’s money. These practices lowers the overhead costs and continues passing the savings to the customer. Costco is an international company and has (Costco Wholesale Corporation, n.d.) “462 locations in 43 U.S. States & Puerto Rico; 87 locations in nine Canadian provinces; 25 locations in the United Kingdom; 10 locations in Taiwan; 9...
Historically, Dollar General operated in a highly price sensitive market segment, with 55% of its consumer base earning an average annual gross income of less than $40,000.[2] To attract these customers, Dollar General employed an Everyday Low Price strategy similar to Wal-Mart’s. Thus, keeping costs low and driving high traffic volumes were critical to the company’s financial success. Dollar General achieved this strategy in several ways, including keeping rents and labor costs low, locating in low-income, high traffic areas that offered consumers few substitutes, and offering a wide variety of popular CPG and white label goods.
Price: All the Costco products have a maximum mark up of 15%, keeping their prices competitive and almost always cheaper than their competitors which usually mark up at 25%. In the video the founder is seen comparing the price of one of their products (a toy truck) to Sam’s Club which was offering it at a lower price, and reconsidering their pricing for it. Their pricing does however force the consumer to buy the product in bulk- making them assume that they are getting the best possible price.
Costco is a very successful company that will continue to rise and become even more successful in the future, all because of the management. It is inevitable that Costco has to have a great management style because the company is so large and is doing so well. How do they keep the company running great though? How do they keep their employees and customers happy, while making money at the same time? In this essay we will find out how the CEO’s and managers run this company. We will learn the style of management and how Costco keeps the employees and customers happy.
Our decision is to invest in Wal-Mart. The choice for Wal-Mart is on the basis that their functional-level strategy is really robust, nevertheless of the fact that they do not treat their employees well. The fact remains that they are financially stronger, have a better business-level strategy, and have a corporate-level strategy than Costco. Costco v. Wal-Mart: What must we learn about them? Let start with Costco. Costco is Wholesale, Retail Corporation which operates an international chain of membership distribution centers that provides quality, brand name merchandise at noticeably more affordable rates than a conventional wholesale or retail sources. Costco 's warehouses display the largest and great product categories such as groceries, candy, appliances, television and media, automotive supplies, tires, toys, hardware, sporting goods, jewelry, watches, cameras, books, house wares, apparel, health and beauty aids, tobacco, furniture, office supplies and office
Costco has many competitors with the primary two being Sam’s Club, a wholesale business being managed by Walmart, and BJ’s wholesale club. Sam’s Club is offering the same services as Costco. They offer their customers lower prices than traditional stores and like Costco they sell their products in bulk to keep members interested. What makes them a threat to Costco is the cost of becoming a member to shop at their stores. For Costco’s basic membership, known as a Business membership, a price increase had to occur to outweigh price increases from their suppliers. This led to the Costco Business membership annual fee being set at $55. When looking into the case study assembled by Thompson, Peteraf, Gamble, and Strickland (2014) they point out that Sam’s Club is able to offer similar benefits ...
In order for Costco to maintain its market position as the largest membership-only warehouse club in the United States, they must identify external factors such as opportunities and threats that affect their market as well as develop strategies that address these factors identifiable in the PESTEL analysis. The PESTEL analysis of Costco Wholesale Corporation indicates that the company has many opportunities for growth in most of the dimensions of its macro-environment. However, the company must also create plans to protect itself from the threats in the
What is a SWOT analysis? This concept involves assisting businesses to identify their strengths, weaknesses, opportunities and threats. It is often used to analyze an organization and its environment. Businesses find the analysis useful in assisting them to improve their business, establish goals and objectives.
A SWOT analysis is simple exercise that could be implemented on multiple subjects including an individual or a whole corporation. The SWOT analysis is an operational tool for managing change, defining strategic direction and setting realistic goals and objectives according to Simoneaux and Stroud (2011). Discovering new opportunities and manage and eliminate threats that are present in the company and the surrounding market. SWOT is a valuable technique that leads to a better understanding of the strengths, weaknesses, opportunities and treats both internally and externally. The strengths and weakness are to be considered internal factors and opportunities and threats to be e...
According to Belicove (2012) in article, NLRB Slams Costco On Social Media Usage Policy: What It Means For your Business, “A ruling by the National Labor Relations Board (NLRB) in a case involving Costco earlier this month makes it clear that employers who want to avoid labor disputes would be well served to schedule a sit-down with their legal counsel and take a close look at their existing social media use policies." In this particular case the NLRB disagrees with Costco Wholesale Corp's employee policies in regards to the use of internet and social media usage and limitations by its employees. After complaints made by over 300 employees the NLRB has finally stepped in siding that Costco is in violation of the National Labor Relations Act. "The three-person NLRB panel deemed that the third largest retailer in the U.S. has employee policies in place that are “too br...
Wal-Mart is coming off a disappointing third quarter when its largest revenue generator, sales from U.S. stores, dropped 0.3%. The company also has forecasted flat earnings during the critically important holiday season. While lowering its full-year forecast, Wal-Mart still expects to see modest sales growth in FY2015 through the opening of smaller, more targeted stores, and its longtime strategy of lowering prices. However, there is some doubt whether these measures will be enough to stave off Wal-Mart 's competitors. Costco NASDAQ: COST is coming off a big year with more than $100 billion in revenue, 5% growth in U.S. store sales, and 7% growth in international sales. As Costco continues to challenge Wal-Mart domestically and internationally,
A SWOT analysis is a measure tool to summarize a company’s internal and external aspects. By measuring the company’s strengths, weaknesses, opportunities and threats and looking for improving solutions by using the strengths and opportunities to improve on the weaknesses and take the necessary actions concerning any threats a company can survive in today’s world market.
SWOT analysis is a necessary tool for business that allows corporations to analyze where their strengths, weaknesses, opportunities and threats lie. The SWOT tool contains paramount information about the industry and helps the executives of the business make decisions that are necessary for the business’s survival and success.
SWOT Analysis is a vital tool to understand the strengths and weaknesses and to identify both the opportunities and threats faced by the company.
The SWOT analysis is used to gauge a company’s strengths and weaknesses. It also outlines opportunities for tapping and presents possible threats that could affect a company’s operations.