Costco Executive Summary

Costco is a leader in the warehouse member club market. They specialize in selling bulk groceries and using their immense buying power to help get savings on items and then pass those savings on to their members. They opened their first warehouse in Seattle in 1983. Costco is unique amongst retailers because they only mark their products up 15 percent (Inside Costco CNBC). In terms of the wholesale club market segment, Costco is one of only three main players. In addition to Costco there is also Sams Club (run by Wal-Mart) and BJ’s wholesale (a smaller company whose primary business is in the Eastern United States). In 2013 Costco had annual sales of roughly $106 billion and was ranked 22 on the Fortune 100 list. As a group we analyzed Costco’s

The first area deals with facilities management and job design. There has to be enough checkout lines to help get people checked out and on their way. In many cases, Costco has many stations, but only a few of them are staffed at any given time. This is where job design comes into play. Costco should look into possibly enlarging some jobs to include cross functional training in how to check people out. This would help keep their workforce lean and flexible. It would also help keep costs down which is very important for their bottom line. For the global expansion efforts Costco will have to look into creating new supply chains to meet the demands of warehouse stores in new countries. They will also have to look into creating new relationships with local suppliers to help cater to unique customer demand in international marketplaces. By focusing on facilities management, job design, supplier relations, and international supply chains Costco can help improve their standing in the industry, increase profits, and help deliver better value to their

One might say selling at a higher price will result in higher profits for the company; well, Costco reimagined this concept. Costco allows for only a fifteen percent markup on their products. In comparison to supermarkets and other retail stores, they will mark-up their products by 25 percent and department stores will mark-up prices by 50 percent or more. The magic in this strategy lies within the concept of “bulk selling”. Items at Costco are sold in bulk; in other words, instead of buying one package of toothpaste Costco will have a value pack of 4-5 packages of toothpaste in one. Customers are going to end up saving money when buying their products in bulk, instead of purchasing them