History
• The first store was opened in Seattle, Washington in 1983.
• Costco’s mission is to continually provide their members with quality
goods & services at the lowest possible prices. In order to achieve their
mission they will conduct their business with the following code of
ethics in mind:
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Obey the law
Take care of their members
Take care of their employees
Respect their vendors
If they do these four things throughout their organization, then they will
realize their ultimate goal, which is to reward their shareholders.
Current Overview
• Costco made $106.46 billion in revenue in 2013
• 648 total locations worldwide
• 461 of those locations are in the United States
• 71.2 million cardholders
• 185,207 full and part-time employees
• Current stock price is around $118.65
• 70% of Costco’s operating income is generated through membership fees
Retail Strategy
• Costco’s small number of SKU’s drive their business strategy
• Having a small SKU means you can easily fit the inventory on pallets in the warehouse store
while still making it easily accessible to consumers
• Costco uses a prepaid membership business model that allows Costco to collect
most of its profits 12 months in advance
• Offers key products (such as milk) at a slightly lower price than other
membership based warehouse stores, such as Sam’s Club, giving it a lead in the
market
• Frequently changes brands and merchandise giving consumers a “treasure hunt
experience”
Strengths
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Private label brand (Kirkland Signature)
Happy employees & Skilled managers
Loyal members
Kind return policy
Economies of scale
Additional services (i.e.: pharmacy, photo developing, gas station, tire
shop, food court)
Membership rewards
Cost advantage over rivals
Good customer service capabilities
Free samples
Weaknesses
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Inconsistent inventory
Little variety in merchandise
Online-store
Store size
Behind on R&D
Supplier dependency
Number of locations
Opportunities
• Improved online store and ecommerce
• Continued growth and expansion in their private label sector
• Continued international expansion
• Costco currently has locations in the United States, Canada, Mexico, United Kingdom, Japan,
South Korea, Puerto Rico, Taiwan, Australia, and Spain
Threats
• Price competition (Sam’s Club and Walmart)
• Online retailers with large selection and inventory
References
http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-homeprofile
http://www.nasdaq.com/symbol/cost
http://www.costco.com/about.html
http://www.usatoday.com/story/money/markets/2013/12/02/why-costco-is-beating-wal-mart/3691555/
http://www.bloomberg.com/news/2013-08-30/wal-mart-vs-costco-iii-why-my-critics-are-wrong.html
Oregon State University. "Evaluating a Company's Resources, Cost Position, and Competitiveness." Integrative Strategic
Experience BA 466. N.p.: McGraw-Hill Education, 2013. 76-77. Print.
Shields, Anthony. "Costco Remains the Wholesale King, but Is It an Ideal Investment?"Minyanville. Minyanville, 12 Nov.
2012. Web. 12 Jan. 2014.