Costco

Costco Wholesale Corporation’s approach to nearly three decades of existence has led the company to arguably being the third largest retailer in the United States of America, and the eight largest of its kind globally (Wikipedia). Its chain of membership warehouses operate in eight countries, and employs around an estimated 142,000 individuals. CEO Jim Sinegal and cofounder Jeff Brotman sought after the discount merchandising dynamic that Sinegal’s mentor Sol Price had in his company Price Club, and initiated a merger between the two. Ever since, Costco has been on a steady rise, but there is no guarantee of how long this form of strategic management and pricing strategy will allow Costco to have a competitive advantage within its industry.

Costco has brand recognition of international substance. It offers some of the lowest prices of national brands and privately-labeled products across a wide range of merchandise categories. The year 2008 had Costco’s sales recorded at over 71 billion dollars from its 544 warehouses: located in 40 American states, Korea, Mexico, Japan, Puerto Rico, the UK, Taiwan, and Canada. Such sales gave an average of 130 million dollars annually per warehouse store (Data). Also, the company’s low markup rate makes its pricing technically a sustainable competitive advantage over other retailers whose markups nearly double or even triple that of Costco. Even more so, the company further reduces prices for customers through a 2% membership reward program which is renewable annually. This price positioning eventually leads to loyal and willing customers. Such a pricing model allows quick inventory turnovers and decreases shipping and handling costs, and as a result will provide fewer expenses for the company in its chain of distribution.

This company can negatively be affected by its limited product choices. Their treasure-hunt merchandising ensures that out of their 4,000 product offerings that 3,000 of them will always be on the floor and...