Costco and the Wholesale Club Industry

Costco and the Wholesale Club Industry

  • Submitted By: montoyakm
  • Date Submitted: 03/03/2009 10:53 AM
  • Category: Business
  • Words: 587
  • Page: 3
  • Views: 1

Costco Wholesale Corporation entered the wholesale club industry in the early 1980´s. The idea behind a wholesale club was to maximize profits by minimizing operational costs and maximizing inventory turnover ratio. Costco Wholesale Corporation is a network of wholesalers that operate in the United States, Canada, United Kingdom, Korea, Japan, Taiwan and Mexico. The corporation’s principal activity is to operate membership warehouses, which provide quality goods for competitive prices. These warehouses offer members very low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories. The available goods range from groceries and candies to furniture and electronic devices. The warehouses are designed to help small to medium sized businesses reduce costs in purchasing for resale and for everyday business use. Individual consumers may also purchase for their personal and home needs. In order to become customer of the warehouses, a potential client should pay a defined annual fee.

Costco´s main competitors in the U.S.A. are BJ´s Wholesales Club and Sam´s Club, which is a division of Wal-Mart Stores. All three are similar companies with the same class of customers and very similar sort of products provided. According to recent reports, Costco has the leading position among customers as the number one supplier of variable products and low prices. Question is….How can Costco maintain it´s leading position without compromising it´s shareholders revenue, prices, merchandise quality and selection and employees compensations? In few words, how can Costco maintain their shareholders, customers and employees happy? Costco has applied a series of strategies to keep it´s leading position in the market, their low prices in comparison to the other two wholesalers has won their customers loyalty, which enjoy the Costco buying experience. This is possible through low operation costs such as constructing...

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