Costco Wholesale Corporation Mission Business Model Essay Example

and a variety of convenient services, Costco strives to be a valuable asset to every community where they do business.

This means providing good jobs at good pay, being involved in community activities and charities, contributing to local tax revenues, offering a profitable business opportunity to their suppliers, and most importantly, taking care of our members (Costco Story). III. Marketing Objective •High sales volume per warehouse- Costco is known as one of the largest retailers in the industry. One Costco warehouse reached more than $300 million in sales, and the average sales per warehouse was $127 million.

Their sales have doubled and even tripled some of the nearest club competitors in the industry (Annual Report 2006). •Be the current low cost operator in retail- Costco has many ways that can help them continue to be the low cost operator in retail. Costco stores are set up with as little frills as possible. Many items are kept in their original packages or left their pallets when they were shipped to the store. This helps to reduce Costco’s overhead costs.

Also, Costco has a lot of buying power which allows them to buy more products at once for lower prices per item.

This can help them save money and allow their members to save money as well (Costco Story). •Open 33 to 35 new warehouses in 2007 (Annual Report 2006)- The $1. 4 to $1. 6 billion that Costco intends on spending during 2007 for real estate, construction, remodeling, and equipment for warehouse clubs and related operations will help Costco with their goal opening the new warehouses, in the US and Canada. •Increase the number of warehouse

club memberships- If the number of warehouse club membership’s increase, then there is a greater chance of a sales increase for Costco.

Also, a larger membership allows the company to buy items in bigger quantities and to pass along savings to customers. “Customers who buy more items may feel that the membership fee is worth paying, because the cost is spread over all the products they buy” (Julie Bick 2007). IV. Situation Analysis Industry Analysis Trends Warehouse clubs and supercenters have grown in popularity over the last several decades. As they continue to expand in the market, their increasing dominance will likely force more structural changes in the retail trade industry.

Many retailers are setting limits and creating scarcity on products to entice their customers (Bick, 2007).

For example, some retailers carry limited-edition items that are unique to their stores, then stock those items for a given amount of time. Companies are also competing to find efficient ways to lower operating costs. The ability to lower operating costs gives retailers a competitive advantage over their competitors. Selling products over the web is another key trend in the industry. Costco alone expanded their sales of 59% over the internet (Annual Report 2006). Competitors

There are over 1,178 warehouse club locations that exist across the U.

S. and Canada, including Costco’s North American warehouses. There seems to be a warehouse club in every major city, if not several club operations. Currently, the leading stores in the category of warehouse membership clubs are Wal-Mart’s Sam’s Club, Costco, and BJ’s Wholesale Club (Lamb 409). Wal-Mart has become the largest retailer in the world and has expanded further into many

other food merchandising formats. Other significant competitors that have emerged into the market are Target and Kohl’s.