History of Costco Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

History of Costco

Costco Wholesale Corporation is a United States based American membership warehouse club which provides the customer to select various merchandising products. It is the second largest retailer in the country as per the statistics of 2014. Along with this, Costco is ranked overall number three amongst the retailers. It is the largest membership warehouse chain in United States. Costco Wholesale has been a rare breed in the retail world for a long time. Costco has been among those retail stores who have been constantly generating revenues and income growth. In the recent past, the revenues and the net growth for the company has risen up to 53% and 80% respectively (Gaudette, 2006).

Costco since the start of its operations have been quite significantly dependent upon the domestic operations. The high end consumers of the retail store are considered as the part of its elite club just like Sam Club for Wal Mart. Along with this, it is important to understand that Costco has decided to grow in the future by using its unique strategy. Costco as a retail manufacturer has been operating in nine countries worldwide. The country has maintained focus of three major countries which are Taiwan, Korea and Japan. However, it is important to understand and realize that China is not on the list. Being such a large and hugely populated country it is a surprise that China is not amongst them (Broberg, 2007).

As per the research in United States, the main competitors for the company are the BJ Wholesale Club and Sam Club. Walmart has the maximum number of warehouses which are by far more than the total stores of Costco. Costco has a total number of 174,000 employees which include the part time and full time employees. Along with this, Costco has a total number of 71.2 million members. Costco has been the first company that has grown from zero to $3 billion in sales in the last six year period. As per the fiscal year ending 2012, the company sales have increased to $97.060 billion with a total profit of $1.709 billion net profit. Costco has been ranked 19^th in the list of Fortune 500 list. Over the years, the retail store, Costco has expanded the product and services to a great extent.

The products that are being sold at Costco include the bakery items, seafood, meat, dairy, fresh items, clothing, pharmaceuticals, home items, electronics, flowers, photo processer, etc. Costco even offers optical products which are ranked as number fourth in the industry. It can be said that Costco over the years has presented itself as the retail store which has grown in stature, in sales and customer satisfaction.

Problem Statement

The problem statement is to identify whether Costco should have its retail stores in China or not. The reason behind the research is to analyze whether Costco: Wholesale Expansion Strategy into East Asia (China) or not.

Marketing Strategies

Business Level Strategy

Costco is a chain of retail stores that deals in several of products such as clothing, groceries, jewelry, health and beauty items, electronic items, sports goods and many more. Costco uses the business level strategy that is Cost Leadership. It aims to attract the customers via selling items at low prices by giving discounts and sales offer on bulk purchases or sometimes seasonal products as well (Goldstein, 2005).

The main idea of Costco is to provide products at low prices in order to have competitive advantages whereas the quality and services provided are of high standards so that the customers prefer Costco stores. Moreover, the biggest competitor of Costco is Wal mart store which works in a way that they provide products to the customers at cheaper rates and customers does not have to rely on the sales offers for that. Therefore, the Wal-Mart is still considered as largest retail store in the United States of America. Keeping in mind this strategy Costco also came up with the idea of lowering its prices, but not decreasing quality in order to keep the customers attracted.

Costco also gives its customer an advantage in a way that it provides a wide collection of products that keeps the customer busy and also providing high quality services such as free shipping. Costco can handle low prices in a way that they have an efficient supply chain and its large scale stores.........................

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