Costco Analysis

Costco Analysis

Company Overview

Costco Wholesale Corporation is one of the largest warehouse club chains in the United States. It is ranked as the third largest retailer in the United State and ranked ninth largest in the world. Costco mainly focuses on selling food supply, general merchandise, household appliances and general goods in heavy discounted prices. Costco maintains its business even with the weak economy, Costco net income rose 15% while sales increase 6%. Costco primary business model is to sale items in low prices to attract customers.

Market Analysis

Costco main competitors are Wal-Mart, BJ and Sam’s Club. These companies’ share a similar business model; sell in high volumes of merchandise at low prices. Each company sells a similar array of general merchandise, including food, apparel, general goods and household appliances. By understanding its competitors Costco continues to remain competitive in the market and maintain its growth. However, with the exception of Wal-Mart, Costco shares a disadvantage business model with BJ’s and Sam’s Club, their business only open to customers with membership of the company. In order to make purchases in Costco, BJ’s and Sam’s Club customers must sign up for membership to purchase goods. However, despite the restriction, most Costco members maintain loyal to Costco and enjoys its heavily discounted prices.

Costco business strategy model is to provide items in large quantity at low discounted prices to attract customers. Despite the 2008 recession, Costco continues to maintain steady positive growth even during slow economic times. However, despite Costco positive growth in the U.S, Costco announced that it will slow down its expansion in the U.S. The reason is Costco wanted to focus expansion on international market instead of U.S market. Countries Costco wanted to focus are China and India due to high demand, opportunity growth and low operation cost.

News

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