Costco Wholesale is the leading warehouse retailer and the second biggest general retailer in the United States of America. The company deals with the sale of household goods, foods, and general merchandise, including appliances. These products are sold by the company in bulk and at greatly discounted prices. The Company is facing competition from BJ’s Wholesale and Sam’s Club, of which they have the same strategies (Thompson, 2009).
The Company’s strategy offers value to the consumer by providing products in bulk and at reduced prices, which assists the wholesale to uphold the growth during hard economic times. Customers who are aware of prices drop by the discount retailer in the hope of getting discounts. The vacation of space by some shopping malls has enabled the Costco Wholesale to purchase these stores allowing for expansion, hence, the company does not have to establish infrastructure. This is one of the strategies which has helped the consumers to have better access to the low-priced shops. Consumers no longer have to drive long distances and are able to shop at other stores under the safe roof. The company stands to benefit from more sales and higher traffic (Andersen & Poulfelt, 2006).
The Warehouse has been in a position to compete with its primary competitors, as its major strategy is cost leadership since they strive to maintain the best price products for their customers. This strategy is working well for the company since they are currently attracting a rich consumer who is ready to spend more, and at the same time, has the strength to purchase bulk goods in a bid to save. Those warehouses which are in line and are competing with Costco include Sam’s Club and Wal-Mart stores. There is evidence of more customers purchasing at Costco than at Sam’s Club, and they averagely spend more on every visit as well. What makes the warehouse to dominate is innovation that it also provides luxury goods and has been the first warehouse to retail and produce fresh meat, as well as gasoline. This has been a major factor in assessing competitors in the industry (Berman, 2011).
In conclusion, it is, therefore, recommended that the warehouse should consider expanding and cannibalizing its existing store locations. As the Company slows down its domestic expansion plans, it should focus heavily on penetrating the international markets in order to allow the future growth. It should increase its warehouses, in order to improve sales, and its revenues, and the company should continually provide discounts to its customers (Thompson, 2009).
Andersen, M. M., & Poulfelt, F. (2006). Discount business strategy: How the new market leaders are redefining business strategy. Chichester, England: John Wiley & Sons.
Berman, B. (2011). Competing in tough times: Business lessons from L.L. Bean, Trader Joe’s, Costco, and other world-class retailers. Upper Saddle River, N.J.: FT Press.
Thompson, A. A. (2009). Crafting and executing strategy: The quest for competitive advantage: Concepts and cases (17th ed.). Boston: McGraw-Hill/Irwin.