Costco Stores – Look At The Review Articles..

The objective of this memo is to assess Costco’s performance compared to Sam’s Club and BJ’s. Costco Wholesale Corporation is a wholesale club that will require customers to buy annual memberships so that you can shop at their stores. Costco’s main competitors were Sam’s Club and BJ’s Wholesale. Costco purchased Price Club in 1993 which enabled it to live in the competitive wholesale industry. It also adopted a technique that was different when compared with its major competitor, Sam’s Club This enabled Costco to be the largest wholesale club in the market in 2001.

Costco’s Performance with regards to BJ’s – When I compared Costco’s total revenues with BJ’s total revenues in Exhibit 5 of FIN 197 Seminar in Finance case book, I realized that Costco’s total revenue were increasing with an increasing rate excluding year 2000 to 2001. BJ’s on the contrary, had growing revenues until 1999 when their revenues then began to grow with a declining rate.

Costco has a higher membership fee and more and this enabled costco holiday hours to get greater than BJ’s. This membership fee is very important since it is the main reason for the company’s financial well being since sales excluding membership fees barely covers operating expenses. Costco also has more warehouses and far higher sales per store. Costco has warehouses in lots of international locations while BJ’s just have warehouses in the united states. However, Costco includes a lower operating and gross margin which demonstrates that BJ’s has better operations and higher product prices than Costco. Costco’s inventory turnover ratio is outstanding because it is much larger than BJ’s. This clearly demonstrates that Costco has an excellent operating efficiency.

Costco’s Performance with regards to Sam’s Club – Sam’s Club, on the contrary, has more members and warehouses as compared to Costco which makes it Costco’s largest competitor. However, Costco had larger total revenues, sales per store and operating income because of its strategy. This is because Costco is much more internationally dispersed when compared with Sam’s Club because it has more warehouses in international locations. I am just struggling to compare Costco’s financial statement performance with Sam’s Club because Sam’s Club information is joined with Walmart.

III. Costco’s core strength and strategy – Costco pursues the strategy of centering on lowering the unit price of goods and buying few Stock Keeping Units (SKUs) from its vendors which enable production savings. Costco’s core strength is made to provide it with higher total revenues and also to create value to the customers. Their core strength can be separated into two:

• Targeting a wealthier number of small businesses proprietors and middle-class shoppers which differs from Sam’s Club.

• Refusing to mark up products a lot more than 14 percent on the distributor’s price

Costco’s technique is really efficient in providing it having a competitive advantage over its competitors BJ’s and Sam’s Club. This is definitely a long term value enhancing strategy because Costco’s main goal is always to ctqosf value to their customers. They are going to definitely obtain many loyal and satisfied customers who do not mind paying an increased membership fee to join Costco. Costco is yet another very ethical company because they are not implementing a method which serves to lessen their costs and cheat customers with their funds in an indirect way.

We have been part of Costco for 2 yrs using a business professional membership. I use Costco for a lot of of my company purchases and so i switched to simply using Costco instead of having both memberships. Bjs and Costco carry the majority of the same things. Costco has a more ofice supplies, toys, etcs I would like for my online retail business.

I feel Costco and Bjs are equally professional and offer good customer care. BJs has the main benefit of accepting MFR coupons and accepts all major bank cards! Costco only accepts checks and American Express within their warehouses (they are doing accept all major credit cards online though) BJs lines manage to move quickly, as well as their aisles, at the very least on the ones We have been to, are better organized.