Costco Effect Essay

The documentary is about the warehouse that never advertises like other stores, sells goods in large quantities, never bag the items purchased by customers and even then has 3 million customers paying membership fees to buy goods from here. The place is Costco Wholesale. It is the biggest warehouse chain in the world with sales of $93 billion a year. Customers have options to buy anything from lawn furniture to an engagement ring. No signs are put up to mark the aisles, this makes shoppers buy things not on their shopping lists and stumble upon other items.. It has changed the way how people shop but also how much they buy. This is known as Costco effect. Costco is among the top sellers of meat. Selling approximately 5 billion dollar worth of meat and another 4 billion in produce. The sale of TV's is 2 billion and of prescription is 3 million pair of glasses. According to the marketing consultant of Costco, it is Americans psychology that more and bigger is better and this strategy is working well in the warehouse along with understanding the customer needs and making products available. Triggers that makes up three quarters of the goods

Only criticism that this warehouse receives is about the long lines at billing counters and having to buy things in bulk. Surprisingly, Costco sells goods at break-even point. Only way it generates profit is from membership fees. The CEO and co-founder of Costco, Jim Sinegal is on the road for most part of the year, visiting every store of the company worldwide. He personally sees what is selling and what is not, which makes Costco a success. The strategy of Costco to keep the prices to lowest possible is reflective from the fact that since 1990's it is selling its hotdogs for $1.50 including soda. The wage rate of Costco is the highest in the industry which is $20/hour including health insurance coverage. As a result of this, it has lowest employee