Case Costco

Blake Hall

GBA 490-001

9/20/12

Case: Competition among the North American Warehouse Clubs:

Costco Wholesale vs. Sam’s Clubs vs. BJ’s Wholesale

1. The competition is the wholesale club industry is very fierce. Not only are they having to compete with each other, they also have to compete with a wide range of retailers such as Walmart, Dollar-General, Target, Best Buy and Office Depot. The competition is based on things like price, merchandise quality and selection, location and member service. The Buyer is the strongest competitive force here. If you don’t have buyers then the inventory will not turnover and cost will go up and sales down. You buyers are the people. Subs are people like Walmart and Dollar-General and the rest that I mentioned above. Suppliers are the food coming straight from the vendor and as for New Entrants with so much capital you need in this industry it’s probably fairly tough to just open up a wholesale store.

2. All three clubs Costco, Sam’s and BJ’s have the same broad strategy. They all sell high quality brand-name merchandise at prices that are significantly lower than those at supermarkets and department stores. Costco’s strategy is ultra low prices and a limited selection of nationally branded products. They like to call it a “treasure hunt’ shopping environment. BJ’s strategy tries to differ from the others by focusing on its Inner Circle or its individual members through merchandising strategies pushing a customer friendly experience. They offer more store hours and smaller package sizes. I feel BJ’s has a good strategy to set them apart from the two bigger wholesalers. Longer hours and smaller portion sizes is a great way to accommodate more people.

3. The strongest financial performer in recent years is by far Costco. They ended 2005 with a total revenue of $53 billion and increased every year since then. In the year 2009, they had a total revenue of almost $72 billion.

4. The data in case exhibit 2...