The Costco Case Study

Costco Case Study

In a time of global financial turbulence and shifting demographics, Costco must find ways to draw and hold on to customers to maintain market share and prosperity. For over 27 years Costco has turn out to be the 4’th largest retailer in the United States and the 8’th largest on the planet. By 2009 it had 413 outlets in the USA, 77, in Canada is 21, the UK, Japan is 9 and Korea 7 Australia it has one and Taiwan has six (not including joint ventures in Mexico). The American and Canadian operations contribute 93% of their net consolidated sales in 2008 and 2009 and 92% of the working income Declines in California or in Canada would be a severe knock to the company’s base line. Costco must persist to respond efficiently to all competitive pressures and adjust to changes in the business. With elevated interest charge, higher purchaser debt loads, energy overheads, inflation, cost to find and keep workforce, and reduced consumer self-confidence in the market Costco faces a harsh economic situation which can affect order for their goods and services. Commodity prices like gasoline and food can shift considerably. Costco has no assurance of vendor supply for merchandise and thus they are vulnerable to changes in the sales terms, prices and access to new goods is not certain. Running out of stock situation can lead to loss of sales and customer trust. Costco faces tough competition from a selection of retailers and warehouse club businesses including the new Internet technology-based sellers. Walmart/ Sam’s Club is still rated first by suppliers and they have better approach to products. The ever-increasing cost of gas is plummeting the number of shopping trips that consumers are taking and reducing their overall level of spending. This Case Study tries to sort ways for Costco to tactically address these issues for a advantageous outlook.

History

Originally based on the model of The Price club where Costco’s founder Jim Senegal had worked for a...