Corporation. References Bloomberg Business Daily (2011, November 24). Costco Wholesale Corp. Retrieved from Farfan, B. (2010, September 10). 2012 Retail Store Closings Roundup: U.S. Retailers Closing or Liquidating Stores: Complete list of U.S. Retail Chains Downsizing or Going out of Business in 2012. About.com. Retrieved from - Industry-Liquidations-Roundup-Chains-Going-Out-Business.htm McKinsey & Company. (2012). The value proposition in multichannel retailing. Retrieved from Read more at:
In a time of global financial turmoil and shifting demographics, Costco must find ways to attract and retain customers to maintain market share and profitability. In the last 27 years Costco has become the fourth largest retailer in the United States and the eight largest in the world. By the end of 2009 it had 413 stores in the USA, 77 in Canada and 21 in the UK, 9 in Japan and 7 in Korea Australia has one and Taiwan has six (not including joint ventures in Mexico). The American and Canadian operations supply 93% of their net consolidated sales in 2008 and 2009 and 92% of the operating income. Declines in California or in Canada would be a serious blow to the company’s bottom line. The economy is taxing and retail sales are down for all major retailers. Costco must continue to respond effectively to all competitive pressures and adapt to changes in the industry. With higher interest rates, higher consumer debt loads, energy costs, inflation, cost to find and retain employees, and reduced consumer confidence in the market Costco faces a tough economic environment which can affect demand for their products and services. In addition, commodity prices like gasoline and food can shift dramatically. Costco has no assurance of vendor supply for merchandise and thus they are vulnerable to changes in the terms of sale, pricing and access to new products is not guaranteed. Out of stock positions can lead to loss of sales and consumer trust. Costco faces strong competition from a variety of retailers and warehouse club operators including internet-based retailers. Walmart/ Sam’s Club is still rated number one by suppliers and they have better access to merchandise. The price of gas is reducing the number of shopping trips that consumers are taking and reducing their overall level of spending. This Case Study recommends ways for Costco to strategically address these issues for a profitable future. Originally based on the model of The Price club where Costco’s founder Jim Senegal had worked for a number of years before starting Costco, this company opened its first store in 1983.
- Spring '17
- Costco Wholesale Corporation, Costco Group Assignment