Retailing Management
Costco
http://www.costco.com.tw
Emer, Orlando, Cook
Contents
1
Introduction
2
Retailing Strategy
3
Merchandise Management
4
Store Management
Introduction
Membership Warehouse Club
 best possible prices on quality brandname merchandise
 wide selection of merchandise
 convenience of specialty departments
 exclusive member services
Introduction
 History
 first location opened in 1976 under the Price Club
name San Diego, CA, U.S.A.
 small businesses  serving a selected audience of
non-business members
 first Costco warehouse location opened in Seattle,
WA, U.S.A.
 Taiwan's first location opened in 1997 in Kaohsiung
- three in Taipei market, one in Hsinchu, one in
Taichung, and one in Kaohsiung.
Retailing Strategy
 Retail Market Strategy
 Target Market Strategy
• Primary target market is small businesses
• Marketing teams contact local businesses, trying to
persuade them into purchasing a business
membership
• Direct mail marketing to attract potential customers
that meet their customer profile
• Reliance of members using word-of-mouth to attract
new members to the company
Retailing Strategy
 Retail Market Strategy
 Products
• Low prices on selected private and a limited selection
of nationally branded products in a wide range of
merchandise categories
• Kirkland Signature: currently carries 330 private label
items which make up 15% of their sales (2006)
• Carry only around 4,000 active stock keeping units
• Some offerings rotate in and out of the warehouse
based on season, and other factors.
Retailing Strategy
 Retail Market Strategy
 Promotions
• Advertising: Costco limits its advertisement to direct mail to
potential new customers.
• Public Relations: Costco allows their customers to sample
many of their products as they walk through their
warehouse.
• Personal Selling: When a Costco warehouse opens in a
given location, marketers contact businesses around the
area to see if they would be interested in becoming a
member.
• Sales Promotion: Costco limits its marketing and
promotional activities to new warehouse openings.
Retailing Strategy
 Retail Market Strategy
 Price
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Aggressively buy from a handful of vendors
Drive the cost down for members and sell in volume
Individual memberships (Gold Star memberships)
Business memberships
Costco China Trust co-branded credit card
Retailing Strategy
 Retail Market Strategy
 Presentation
• Warehouse-type setting
• Merchandise is generally stored on racks above the
sales floor and displayed on pallets containing large
quantities of each item.
• First things: the most expensive products (diamonds,
flashy toys)
• Understand their customers in a given location
• Entice customers to maximize their sales
Retailing Strategy
 Layout
Bakery
Bakery
Meat/Fish
Delicatessen
Fruit
Liquor
Frozen Food
Frozen Food
escalator
Casher
Food Court
escalator
Retailing Strategy
 Layout
Photo
Optical
Pharmacy
Office Supplies
Jewelry/Watches
Office Supplies
Jewelry/Watches
escalator
escalator
Retailing Strategy
 Retail Market Strategy
 Personnel and Customer Service
• Optical, Photo, Tire Center, Food Court, Pharmacy.
• Keeps labor costs low by squeezing more sales out of
fewer people.
• Limits the amount of employees they have on the
sales floor
• No commissioned sales people that work at Costco:
customers do not feel pressured by Costco workers to
purchase a given product.
• Two employees in the cashier line
Retailing Strategy
 Human Resource Management
Manager
Deputy Manager
(Commodities)
Receiving
Manager
Deputy Manager
(Administration)
Product Manager
Executive
Manager
Cash Manager
Meat Manager
Food Director
Member Director
Cash Officer
Hardware
Director
Maintenance
Officer
Cash Officer
Clothing Officer
Cash Officer
Tire Factory
Cash Officer
Push driver
Cash Officer
(Seasonal)
Bakery Manager
Retailing Strategy
 Human Resource Management
 Human Resource
• Estimates for the number of employees in the store
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the number of check-out counters : 9*2*2 = 36
maintenance : 2
cleaning crew : 6
operations crew : 7
bakery crew : 4
butchery crew : 4
A group who introduce Costco : 5
Retailing Strategy
 Human Resource Management
 Objectives
• To make every new employee to increase
experiences by facing every problem.
• To raise up positions of employees from internal
resources.
• Training Process: every stage for 3 months
Retailing Strategy
 Human Resource Management
 Organizational Structure and Plan
• Code of Ethics
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obey the law
take care of members
take care of employees
respect suppliers
reward shareholders
• Low turnover of employees
– Comfortable environment
– Higher salaries than others in the industry for 1 to 2
Retailing Strategy
 Information System
Retailing Strategy
 Information System
 IBM Point of Sales (POS) System
• IBM SurePOS 4694 Supermarket Application
• AS 400
 Advantages
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Successfully shorten checkout time
Help inventory management
Save accounting human resources
Provide structured analysis by sales information
Retailing Strategy
 Customer Relationship Management
 Services
• Unconditional double guarantee
– On merchandise: Every product sell with a full refund
– Refund membership fee in full at any time dissatisfied
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Unlimited Drink Bar
Feedback Box
Serve members free breakfast to know customers
Focus on satisfy all the need of members
Merchandise Management
 Managing Merchandise Assortments
 Merchandise category
• Jewelry/Watches • Hardware / Storage
• Automotive
• Apparel
• Lawn / Garden
• Computers /
Electronics
• Sporting goods
• Office Supplies • Domestics / Furniture
• Small Appliances • Fresh Meat / Fish
• Books / Media
• Frozen Food
• Seasonal / Toys • Tobacco / Liquor
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Fresh Delicatessen
Snacks
Bakery
Health / Beauty Aids
Photo
Optical
Food Court
Tire Center
Pharmacy
Merchandise Management
 Warehouse
 Location
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•
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Amount of people
Land cost
Nearby industry structure
Nearby average annual income
Acceptability of membership
 Target
• White-collars
• Employees in Science Park
Merchandise Management
 Warehouse
 Object flow
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Direct transportation from suppliers to stores
Uni-purchase of foreign products to stores
Ware housing
Three layers: 1 for display, 2 and 3 for inventory
 Suppliers
• Quality
• Price
• Brand name