Costco SWOT Analysis

Cost is a wholesaler since it buys products from suppliers and resells them to both retailers and consumers. Cost is the second largest retailer in the united States. Its greatest advantage is its wide range of merchandise. Cost has many locations and has retail outlets in other countries. Originally, Cost was merged with price Club and the original executives belonged to both companies. However, Sol and Robert Price left to start Price enterprises which is no longer in existence today.

It was not until 1997 all stores officially hanged their name to Cost. Today annual revenue is in excess Of 77 billion US dollars. Cost has a huge target market which includes the family since families like to buy in bulk to keep things on hand. However, Cost has merchandise for kids and a lot of single people go to Cost as well so it can appeal to pretty much everyone. Businesses are another target market since a lot of smaller businesses can buy the goods they need for an affordable price and get it in bulk. Bakeries for instance buy drinks, pastries, and breads which can be sold at a higher price.

Cost’s main competitor is Cam’s Club. Cam’s Club is owned by Wall-Mart which helps Cost because small businesses do not support Cam’s Club as much as Cost. A lot has to do with image. Cost buys brands and renames them under the Kirkland name. Cam’s Club struggles to be able to rebind certain products. For instance, in 2002 Cost bought Bumble Bee tuna and renamed it under the Kirkland brand and it sold pretty well. Strengths One of the largest retailers. Cost is one of the top wholesale clubs in the United States. It is present in thirty-eight countries and operates through 664 warehouses.

Offer free samples. This entices the person to buy the product. Good quality meat department. I hear a lot of compliments about the meat section at Cost. Their whine selection has a nice variety as well. Great customer service Rapid turnover of inventory Has a wide arrange of merchandise categories such as electronics, liquor, clothing, food, decorations, and furniture plus much more. Sell automotive products including gasoline Also operates consumer and business services Online shopping- online stores are available for consumers in the UK and Mexico as well as the United States and Canada.

Cost opened up a business o business online shopping site in 2001. Started offering online photo printing for its members in 2005. Cost members can receive vacation packages for hotel lodging, cruises, and theme parks. Executive members have even greater benefits with Cost travel. There are also discounts on auto insurance and home insurance. Overall, their membership package is better compared with Cam’s Club. For a forty dollar membership with Cam’s Club one will get free flat tire repair, battery testing, wiper blade installation, and a program in which you can buy online and pick up the product at the tore the next day.

The advantage plus membership at Cam’s Club for one hundred dollars will get one those perks plus early bird shopping at 7 a. M. With a discount on pharmacy medications and extra year warranty on select items. Get food while shopping- Cost offers a menu including hot dogs, pizza, a chicken bake, sodas, smoothies and frozen yogurt. Cost knows its customers get hungry while walking their huge store and most people have most likely skipped breakfast or have not eaten lunch. The variety of choices is appealing with pizza offered as cheese, pepperoni, veggie, or a combo.

The court is vanilla, chocolate, or swirled. I think yogurt was a great choice since customers are moving towards healthier choices. My opinion is people feel better about eating a hot dog since he or she chose a healthy option by eating yogurt rather than ice cream and a hot dog both. Consumers trust the Kirkland brand and believe in Cost having better quality than Cam’s Club. Net income for the 2014 fiscal year which ended August 31, was 2. 06 billion up from 2. 04 billion. Cost is the leader in coupon savings over Cam’s Club. Members receive coupons in the mail for in store grocery items and on tires.

Cam’s Club offers their E-value coupons only for their higher paying members. Cost gives online coupons to entice online shoppers. Sells movie tickets to MAC, Regal, and Cinerama theatres. They sell ten packets to MAC and tickets in four packs to Cinerama. The savings for the tickets range around three to four dollars. Cost honors the ARP or senior citizen discount card so one can get discounts on drinks and popcorn. Buying in bulk allows Cost to sell in bulk. Their whole company is geared for this. This way products are available on a large scale and can reach as many consumers and businesses s possible.

Cost does not have to rely on their suppliers to meet their demand in the same time frame as other businesses since they can ship products from their warehouse bought in bulk. They cut out the middleman so it is disintermediation. They have a better access to products than retail businesses which have to wait for their supplier to come. They have wet depots and dry depots meaning their goods are stored both outdoors and indoors. Having one of their main depots in Mira Loom by the Pacific Ocean is a strategic location for Cost for their goods shipped from overseas. Weaknesses

Brands change based on buying power, whoever supplies the cheapest products will be the manufacturer which gets its products in Cost’s stores. Talking with a Cost member I discovered she was frustrated she could not find the Geraldine chocolate brand. She said Cost switched to Heresy’s. Cost has switched from some brands customers really like which are name brand. Do not warranty electronics. Wall-Mart offers warranties for at least up to a year for most electronics. Despite some opinions, I have heard numerous complaints more than not about Cost’s hours open from only ten to six in he afternoon.

If Cost kept regular business hours I believe they would make up for their labor costs in improved sales. Overcrowding in the store- It is inconvenient for customers who are held up by waiting for space to walk. There is not enough floor space. This especially makes it difficult for those who are handicapped. Opportunities Sales boosted in October by 7% excluding gasoline. Clothing, fresh food, small appliances, and home products increased sales. As a result of the economy more people are shopping at Cost for clothing rather than Gap which has seen dwindling sales lately.

Internet shopping -In October 2014, Cost announced plans to open up an online store through the Alabama company in China. Cost just recently launched their online store through Alabama. The online store sells food and healthcare products as well as bringing the Kirkland brand to Chinese consumers. The recent falling gas prices are a boost to Cost’s gasoline sales. Continue to offer quality employees and good service. Asking friends what he or she liked at Cost they told me the willingness to find whatever one needs was beyond the service he or she received at other stores.

Wait to put new coke build your own flavor machines in place to see if the trend stays and if the price of the machine will drop. If they buy the machines since they first came out it could waste money. The reads Cost’s biggest threats are its competitors which are Cam’s Club and Bi’s Wholesale Club. Poor domestic and international economic conditions Rising costs associated with employees like healthcare costs Falling gas prices can also give Wall-Mart a price advantage. Cam’s Club has more locations than Cost. Their membership fee is also forty-five dollars rather than fifty-five dollars.

Some benefits to the Advantage membership at Cam’s Club are free tire repair, battery testing, and the Click N Pull program is an online program where shoppers buy online and pick up the item at the store the next day. The current state of economy is there are a lot of people out of work. People would rather get furniture at cheaper prices at Cam’s club or go to Wall-Mart for groceries and food. Bad publicity- A lot of Christians were unhappy books were accidentally labeled with fiction stickers. Since employees did not respond till after a photo was tweeted this gave Cost some negative attention. The main difference in the membership between Cam’s Club and Cost is the early bird shopping which can only be gained through the Advantage plus membership at Cam’s Club which costs a hundred dollars. Cam’s Club is better at promoting membership. Strategies Section Raise the price a little on the name brands so the consumer can find the brand they like rather than going to another store. Some customers will pay more for the jolly green giant canned goods rather than buy canned goods which do not taste as good. Make the layout of the store more accommodating for customers.

When there are too many pallets in the aisles no one wants to take a ton of time just to get a single product or even one or two products, it seems to be laziness on the stockers part. It is really hard on those with disabilities or those in wheelchairs. Opening all business hours could even help the overcrowding of the store on a daily basis to where people could actually have room to walk through the store. Especially the elderly or those who work nights would like morning shopping hours. Some customers do not feel there is a huge amount in savings at Cam’s Club marred with Cost.

Cost is more likely to carry bigger packages than Cam’s Club which some consumers prefer but some like the smaller packaging. Cost could offer some smaller packaging at a smaller price on some food products. Should follow Wall-Mart’s warranty policy of returning the product and paying the shipping for you rather than it being the customer’s job to contact the manufacturer. Promote membership more rather than relying on word of mouth alone. Conclusion Cost offers its customers great service and great benefits through the Cost membership.

The discount on car purchases, travel, and movie tickets really place Cost above Cam’s club in benefits for members. Cost has a wider target market since it sells a wide range of products in its store. A customer can shop for furniture, groceries, garden supplies, and electronics all at the same place. Then, one can fill up their tank and enjoy a good hot dog and a frozen yogurt afterward. Cost had a boost in sales during the back to school season. Selling school supplies allows Cost to compete with Staples and other stores. Clothing has been a boost in sales in the month of October.

Cost’s greatest competitive advantage is its good quality products at a wide selection. The employees are very friendly and will go out of their way to help customers find the item he or she is looking for. Their online shopping is superior to Cam’s Club because Cost gives more coupons. By being their own distributor this gives Cost the competitive advantage of restocking their retailers faster than other places. Cost also is extremely careful in packaging and researches the products it puts on the shelves. Their own Kirkland name brand reaches a quality other brands cannot like Stator’s rand.

Cost could do a better job of promoting their membership. Think Cost should send more representatives out to get smaller businesses to join and send more mail outs. Cam’s Club seems to be better at promotion, but overall Cost seems to be a better competitor over Cam’s Club which is its strength.