Competition Among the North American Warehouse Clubs: Costco Wholesale Versus Sam’s Club Versus Bj’s Wholesale

1. What is competition like in the North American wholesale club industry? Which of the five competitive forces is strongest and why? Use the information in Figures 3.3, 3.4, 3.5, 3.6, and 3.7 (and the related chapter discussions on pp. 41-53) to do complete five-force analysis of competition in the North American wholesale club industry.

Competition among the North American wholesale club industry is pretty much high. Everyone tries to achieve lower prices by reducing the cost in displayed items on pallets or inexpensive shelving. They also have very low costs for store décor and fixtures and comparatively low labor cost because they use fewer personnel to operate their facilities.

The five competitive forces among the industry are also very important. However, rivalry among competing sellers, buyers and suppliers are the most important. Since we’re discussing major wholesale clubs, the possibility of these being affected by potential new entrants is very low. Industries offering substitute products are not an important factor however in this case we are talking about large quantities. Supermarkets offer the same types of products but the target market is completely different. On the other hand, the pressure of buyers is very important. Customers always look for better prices and the demand in the industry is high. Rivalry among competing sellers plays an important role. The ability to provide better prices depends on the company’s relationship with its suppliers.

2. Do all three warehouse club rivals—Costco, Sam’s, and BJ’s Wholesale—have highly similar strategies? What differences in their strategies are apparent? Does one rival have a better strategy than the others? Does one rival have a somewhat weaker strategy than the other two?

All three clubs have similar strategies. Costco’s strategy was aimed squarely at selling top-quality merchandise at prices consistently below what other wholesaler or retailers charged. Sam’s and Costco have also developed...