Subject category:
Strategy and General Management
Published by:
IBS Case Development Center
Length: 15 pages
Data source: Published sources
Topics:
Wholesale club operation in the US; Supermarkets in the US; Discount stores in the US; Items sold in Costco; Warehouse club industry in the US; Ancillary industries of warehouse clubs in the US; The growth of Costco; Membership at Costco; Operating expenses at Costco; Merchandising strategy at Costco; Growth strategy of Costco; Competitors of Costco; Sam's Clubs; Wal-Mart
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Abstract
In 2003, Costco was the largest wholesale club operator in the US, ahead of Sam''s Club (Wal-Mart) and BJ''s. Costco had earned a distinct identity for offering a wide variety of products at deep discount prices. The company was able to undercut its competition in terms of price, by setting up warehouse style stores without any deluxe fixtures, sourcing products directly from the manufacturers, and selling in bulk etc. This case traces the growth of the company, and how various strategies were employed to create a competitive advantage in the market. The case also talks about the nature of competition that Costco faces and what innovative ideas it had come up with to counter them. The teaching purpose includes the following issues: (1) given the impending saturation of the wholesale operator market in the US, what could Costco do in terms of new and innovative store formats to keep up the competitive advantage?; and (2) discuss the factors that need to be considered when expanding into international markets. Should Costco duplicate its operating philosophies in all foreign markets or not.
About
Abstract
In 2003, Costco was the largest wholesale club operator in the US, ahead of Sam''s Club (Wal-Mart) and BJ''s. Costco had earned a distinct identity for offering a wide variety of products at deep discount prices. The company was able to undercut its competition in terms of price, by setting up warehouse style stores without any deluxe fixtures, sourcing products directly from the manufacturers, and selling in bulk etc. This case traces the growth of the company, and how various strategies were employed to create a competitive advantage in the market. The case also talks about the nature of competition that Costco faces and what innovative ideas it had come up with to counter them. The teaching purpose includes the following issues: (1) given the impending saturation of the wholesale operator market in the US, what could Costco do in terms of new and innovative store formats to keep up the competitive advantage?; and (2) discuss the factors that need to be considered when expanding into international markets. Should Costco duplicate its operating philosophies in all foreign markets or not.