COSTCO - COSTCO The Only Company Wal-Mart Fears Nobody runs...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
COSTCO The Only Company Wal-Mart Fears Nobody runs warehouse clubs better than Costco, where shoppers can’t resist luxury products at bargain prices. FORTUNE Monday, November 10, 2003 By John Helyar In the world of retailing, Wal-Mart is the unstoppable, insatiable force. With $247 billion in revenues—and growing 15% a year—it reduces downtown shop owners to quivering jelly and once-formidable competitors, like Kmart, to bankruptcy. Wal-Mart CEO Lee Scott rules the commercial strip the way Julius Caesar once ruled the Roman republic. Except, that is, for a solitary rebel-held province where a company 20% the size of Wal- Mart has made a monkey of the 800-pound gorilla. In the retail niche of warehouse clubs, the irresistible force is an irresolute flailer. During the past ten years Wal-Mart has gone through five CEOs and countless stratagems at Sam's Club trying to assume its customary command. All have been thwarted by Costco Wholesale, the master of the cavernous space. Costco vs. Sam's: A Primer
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Costco Sam's Club Year founded 1983 1983 U.S. revenues (year ended Aug. 31, 2003) $34.4 billion $32.9 billion (est.) Presidents (or equivalents, since founding) one seven Membership cardholders 42 million 46 million Members' average salary $95,333 N.A. Annual membership fees $45 $30-35 U.S. warehouses 312 (423 worldwide) 532 (604 worldwide) Average annual sales (per U.S. location) $112 million $63 million Average transaction $94 $78 Average sales per square foot $797 $497 Starting hourly wage $10 N.A. Employee turnover per year 23% 45% (Wal- Mart) Private label (as % of sales) 15% 10% Sources: AC Nielsen Homescan, Management Ventures, Prudential Financial Consider some figures. Sam's Club has 71% more U.S. stores than Costco (532 to 312), yet for the year ended Aug. 31, Costco had 5% more sales ($34.4 billion vs. an estimated $32.9 billion). The average Costco store generates nearly double the revenue of a Sam's Club ($112 million vs. $63 million). Costco is the U.S.'s biggest seller of fine wines ($600 million a year) and baster of poultry (55,000 rotisserie chickens a day). Last year it sold 45 million hot dogs at $1.50 each and 60,000 carats of diamonds at up to $100,000. Chef Julia Child buys meat at Costco. Yuppies seek the latest gadgets there. Even people who don't have to pinch pennies shop at Costco. "I like bargain securities," says Berkshire Hathaway vice chairman Charlie Munger, a Costco shopper, investor, and director. "Why shouldn't I like bargain golf balls?" The one man Wal-Mart fears doesn't seem fearsome in person. At 66, he has hair as thin as his company's margins, and he seems more like a twinkle-eyed grandfather (which he is, eight times over) than a killer retailer. His office in suburban Seattle overlooks the parking lot of the Costco next door. The folding chairs for visitors bear Los Angeles Lakers logos. The lamp on his desk is festooned with old nametags. One wall has two Swiffer mops leaning against it; another, along the hallway, was knocked down to make
Background image of page 2
the boss viewable and available to passing colleagues. Or they can pick up the phone and
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 8

COSTCO - COSTCO The Only Company Wal-Mart Fears Nobody runs...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online