CostcoCurrent Company’s Strategy
Costcocurrent company’s strategy
Costcois a giant retailer with outlets in the United States and other partsof the world. The company was founded in 1976 as a Price Club. It isoperated as a membership warehouse club and aims at ensuring that itsmembers have access to a variety of quality products at the bestprices. Over the years, it has grown into one of the largestretailers in the world. The most important feature of Costco businessstrategy is offering the members the lowest prices in the market. Italso provides branded products, emphasize on reducing the cost ofoperations and creating better shopping environment, which issupported by the slogan, “treasure hunt”. The company supportsits pricing strategy by stocking products that it can bargain theprices with the manufacturers. The product selection approach ensuresthat the retailer stocks selected items. The treasure huntmerchandising where bulk packages are sold to large families andcorporate clients is the core sales model of Costco. According tothe retailer’s management, this strategy reduces the cost ofoperation, especially marketing expenses. It is also in line withthe low-cost ploy, which results in the most competitive prices inthe market (Thompson, 2012).
Althoughthe business strategy adopted by Costco has been able to propel thecompany into one of the biggest retailers, it is not void ofweaknesses. For example, the model, which focuses on the members onlyand a limited number of products, has an adverse impact on itscompetitive advantage. For example, its competitors such as such asWal-Mart stocks up to 150,000 products (compared to about 3,600products in Costco stores) and targets a broader range of clients(Thompson, 2012).
Thompson,A. (2012). Costco wholesale in 2012: Mission, business model andstrategy. In Thomson, A. et al. (2012). Crafting and executingstrategy: the quest for competitive advantage, concepts and cases,(pp c6-c25), New York: McGraw-Hill Higher Education.