Costco Stores – Browse Even Further To Help With Making An Educated Course Of Action..

The purpose of this memo is to assess Costco’s performance when compared with Sam’s Club and BJ’s. Costco Wholesale Corporation is actually a wholesale club that needs customers to get annual memberships so that you can shop at their stores. Costco’s main competitors were Sam’s Club and BJ’s Wholesale. Costco bought Price Club in 1993 which enabled it to live in the competitive wholesale industry. It also adopted a technique that was different when compared with its major competitor, Sam’s Club This enabled Costco to be the largest wholesale club in the business in 2001.

Costco’s Performance with regards to BJ’s – After I compared Costco’s total revenues with BJ’s total revenues in Exhibit 5 of FIN 197 Seminar in Finance case book, I discovered that Costco’s total revenue were increasing with an increasing rate except for year 2000 to 2001. BJ’s on the contrary, had growing revenues until 1999 when their revenues then begun to grow with a declining rate.

Costco features a higher membership fee and a lot more and this enabled to get higher than BJ’s. This membership fee is very important since it is the primary reason for the company’s financial well being since sales excluding membership fees barely covers operating expenses. Costco even offers more warehouses and much higher sales per store. Costco has warehouses in many international locations while BJ’s just have warehouses in america. However, Costco includes a lower operating and gross margin which shows that BJ’s has more effective operations and higher product prices than Costco. Costco’s inventory turnover ratio is outstanding as it is larger than BJ’s. This clearly implies that Costco posseses an excellent operating efficiency.

Costco’s Performance in terms of Sam’s Club – Sam’s Club, on the other hand, has more members and warehouses as compared to Costco making it Costco’s largest competitor. However, Costco had larger total revenues, sales per store and operating income due to the strategy. This can be because Costco is much more internationally dispersed when compared with Sam’s Club because it has more warehouses in international locations. I am not able to compare Costco’s financial statement performance with Sam’s Club because Sam’s Club data is joined with Walmart.

III. Costco’s core strength and strategy – Costco pursues the technique of centering on lowering the unit value of goods and buying few Stock Keeping Units (SKUs) looking at the vendors which enable production savings. Costco’s core strength was created to provide it with higher total revenues as well as to create value to its customers. Their core strength could be split into two:

• Targeting a wealthier selection of small businesses proprietors and middle-class shoppers which is different from Sam’s Club.

• Refusing to mark up products greater than 14 percent over the distributor’s price

Costco’s method is really efficient in providing it using a competitive advantage over its competitors BJ’s and Sam’s Club. This is definitely a long term value enhancing strategy because Costco’s main goal is always to ctqosf value with their customers. They are going to definitely obtain many loyal and satisfied customers who do not mind paying a higher membership fee to join Costco. Costco is yet another very ethical company because they are not implementing a technique which serves to lessen their costs and cheat customers of the funds in an indirect way.

I have been a member of Costco for a couple of yrs using a business professional membership. I personally use Costco for many of my business purchases therefore i switched to merely using Costco as opposed to having both memberships. Bjs and Costco carry the majority of the same things. Costco includes a more ofice supplies, toys, etcs I need for my online retail business.

I feel Costco and Bjs are equally professional and offer good customer support. BJs has the advantage of accepting MFR coupons and accepts all major bank cards! Costco only accepts checks and American Express within their warehouses (they actually do accept all major credit cards online though) BJs lines seem to move very quickly, as well as their aisles, a minimum of at the ones We have gone to, are better organized.

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