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Costco Company Overview

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Costco operates on a membership only basis, therefore customers and businesses must purchase a membership to shop at the retailer. Costco currently has two memberships available, which are their individual membership, also known as Gold Star, and their Business membership, both of which cost $55 annually (10-K, 2015). For $110, a customer can upgrade to an executive membership, where they can enjoy a 2% discount (SWOT, 2015). They currently have around 75 million members, and due to their no-frills approach, low prices, and high quality products they have a high member retention rate of 91% in the U.S. and Canada, and an international rate of 87% (Forbes, 2016).

Costco has been steadily growing and their net sales increased from $75,255 million in 2010 to $110,212 million in 2014 (SWOT, 2015). Because they have minimized costs due to their efficient organizational model, they have also been able to lower labor costs. They participate in very little marketing and have cut out many redundancies in their freight shipping process. This has resulted in a hefty increase in their cash from $4,644 million in 2013 to $5,739 million in 2014 (SWOT, 2015). Costco is currently being traded at a high of $149 per share (NASDAQ, 2016). This has allowed Costco to have the freedom to focus on growing and improving. …show more content…

Their online sales were $3.5 billion in 2015, which is a 20% increase from 2014, and they are hoping to continue to grow their online presence (Great Speculations, 2015). They have also been working to produce more private label products, such as their brand Kirkland Signature, which are high quality products available at an affordable price. Customer demand for private label brands has increased recently, so Costco plans for private labels to make up 30% of their merchandise in the next few years (Trefis,

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However, the Price Club owners left the company a year later, and so PriceCostco had to rebrand themselves to Costco Wholesale

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Costco has a lower return on assets than others in its industry, so they make slightly less money than their competitors based on how much they sell, but they have a lower asset

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Their current market situation and competitive strategy highlights aspects that Costco has implemented in the organization to increase sales and

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Costco is a membership warehouse club. Costco is dedicated to bring members the best quality items in bulk with the best possible price. It started as Price Club in 1976. When it opened up in 1976 the only purpose the business had was serving only small businesses. But later found out that they would be better off selling to non-business members.

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The introduction of Costco, an extremely large business to a semi rural area will have both pros and cons for not only the area but also Costco itself. These issues include • Political Implications • Environmental Implications • Social implications • Technological Implications • Legal Implications • Economic Implications Political – Political implications on the local community would obviously include legislation and regulation. For example the products they are able to sell and also the local politicians will campaign for or against it. The government controls the sale of certain products; this means that for Costco to want to sell particular products such as alcohol there is legislation that they must abide by. Costco will also have to

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In Costco’s macro-environment, a variety of factors could affect the company’s economic viability. External factors such as inflation, foreign currency exchange rates, levels of unemployment, reduced consumer confidence, and changes in tax policies could unfavorably affect the demand for Costco’s products and services. Prices of some goods and services including food products, are often variant and subject to fluctuations deriving from changes in domestic and foreign supply and demand, competition, taxes, labor costs, or delays in delivery which could significantly affect Costco’s sales. Therefore, the product’s costs and selling could also increase affecting financial results. Other important economic factors include the increasing international

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In addition, Costco does a great job in their internal growth process with hiring (Loeb, 2015). Costco’s purchasers do well as they know their store locations and the local demographic’s desires. For instance, in Australia, the Costco there like Vegemite, so they have that there and not in U.S. locations (Loeb, 2015). Costco is smart with their distribution chains as they usually use 65% of local bought and specific products (Loeb, 2015). Globally, Costco has built trust within their brand as customers go to them for quality service, freshness, and a great selection of products.

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Key Trends – Globalisation One of the main opportunities Costco has is more global expansion to specific targeted countries. Although operating in many countries, Costco is heavily dependent on the U.S. and Canadian markets. It still has the opportunity to expand into the Asian and Australian markets where it has a limited presence. Costco has the capability to operate about 100 stores in Taiwan, Korea and Japan combined and about 20 stores in Australia. It currently has 41 stores in Taiwan, Korea and Japan combined and 6 stores in Australia.

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Gold Star membership targets the individual or typical household and is offered at $55.00 for an annual membership. Business membership also cost $55.00 for an annual fee and includes household membership and focuses on business owners and managers. This type of membership is used for the purchase of products for business use, personal use, and resale use. The membership owner may add up to an additional six members for an annual of $55.00 each. The Business membership is Costco core target of offering small businesses products with reduced costs intended for resale.

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Costco is high aggressiveness retail firms due it sells

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