Costco

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Costco continues to experience growth while other retailers are struggling to reach previous years goals. During the fiscal year 2012 Costco was able to increase revenue generated by 11.5% when compared to 2011. The increase is larger because of sales at new warehouse stores, membership fees and a rise in gasoline prices. During the same time operating profit increased by 13.1% indicating that Costco continues to increase revenue and market position to improve profits (Global Data, 2013).
Members of Costco have strong brand loyalty and in 2012 it was reported they had a membership renewal rate of 89.7% in the United States and 86.4% worldwide (Global Data, 2013). Costco offers members a diverse product offering from name brands, private labels, candy, snacks, fresh produce, meat, electronics, health and beauty to name a few. Members also receive value added services like insurance, business services, travel resources, and automotive repair. In 2012 the membership fee accounted for 2.13% of the total sales but also increases brand loyalty and renewal memberships. Costco also offers members a complete satisfaction guarantee and will allow members to return items at any time with or without receipt if you are not happy (Global Data, 2013).
Brand loyalty is further solidified by positioning itself as a price leader. Costco’s average markup on merchandise is lower when compared to competitors, which helps to drive member traffic while price sensitive consumers look for value brands and lower price point during economic uncertainty (Market Line, 2013).
Despite having low markup margins Costco can remain competitive because of their low cost operating model. They strive to create efficiency along the value chain which is then passed onto their members. Costco offers a variety of products but they have limited selection of each product. Purchasing inventory

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