...The competition in the American Warehouse Club Industry is based on factors such as price, merchandise quality and selection, location, and member service. They also had competition from retail discounters like Wal-Mart and Dollar General, general merchandise chains like Target and Kohl’s, specialty chains like Office Depot and Staples in office supplies and Best Buy in electronics and DVDs, supermarkets, gasoline stations, and Internet retailers. The strongest competitive industry force is competition between like firms. This is because all three of the wholesale clubs are so similar. They all had low prices, warehouses ranging from 70,000 to 130,000 sq ft (some up to 160,000), and very low operating costs, sell products in bulk packaging and offer membership. They are all so alike that it pretty came down to which ever store a customer went to first they would stick with. All three wholesale clubs have similar strategies. They sold high-quality brand-name merchandise at prices that were significantly lower than those at supermarkets, discount retail chains, department stores, drugstores, and specialty retail stores like Best Buy. But BJ’s expanded their strategy a little more. It focused on its Inner Circle members through merchandising strategies that emphasized a customer-friendly shopping experience. Club locations were clustered in order to benefit from greater name recognition and maximize the efficiencies of management support, distribution, and marketing...
Words: 404 - Pages: 2
...1.What is competition like in the North American wholesale club industry? Which of the five competitive forces is strongest and why? Use the information in Figures 3.4, 3.5, 3.6, 3.7, and 3.8 (and the related chapter discussions on pp. 57-70) to do a complete Five-Forces analysis of competition in the North American wholesale club industry. In North American wholesale club industry, there are three principal competitors: Costco Wholesale, Sam’s Club and BJ’s Wholesale Club. Costco has approximately 56% share of warehouse club sales in North America; Sam’s Club has about 36% share and the rest 8% goes to BJ’s Club and other small warehouse clubs. A five forces analysis Rival Sellers: This is a strong competitive force in this case. All these three principal competitors: Costco Wholesale, Sam’s Club and BJ’s Wholesale Club, charge membership fees and offer low prices to attract members. The competition among them is vigorous: the products they offer are similar and they all have price advantage. Customers may easily switch membership from one to another. Potential New Entrants: This is a weak competitive force in this case. The three principal competitors: Costco Wholesale, Sam’s Club and BJ’s Wholesale Club have advantage because it is difficult for new companies to enter this industry. To be a new entrant, a company must have large amount of capital to acquire big enough building and land to satisfy large scale buying and selling; also it has to have an established distribution...
Words: 671 - Pages: 3
...Case 4 Competition among the north American warehouse clubs Competition is extremely high in the north American warehouse club industry. Every wholesale club wants sell top-quality merchandise at consistently lower prices than others to draw customers. They have low labor costs and don't spend much on ads and customer service. Competition of like terms is the strongest because all warehouse clubs sell similar products, but they try to compete by lowering the price of them. The threat of substitutes is extremely high because there are many substitutes with zero differentiation. Many products are commodity based. Rivalry among competitors is high with the main driver being low prices. With such large economies of scale and lack of distributors, warehouse clubs are able to offer direct discounts on items. With low prices being the driving force of the industry, each warehouse club must differentiate itself in some way to create an advantage over its competitors. Suppliers have large input in supply but lack the ability to enhance products. All three of these warehouse industries have similar strategies in a way in which all three try to sell top quality products for the lowest price possible and in big bulks. Costco and Sam’s club share common features in their distribution technique. Costco’s strategy is to sell mostly private label products at significantly lower costs than branded items. Sam’s club features lowest membership costs out the top three warehouse clubs in North...
Words: 586 - Pages: 3
...POLICINA, JULPHA CLARISSE P. SABLAN, JUSTINE ABIGAIL C. STRAMAN K33 Case 2 – Competition among the North American Warehouse Clubs 1. What is competition like in the North American wholesale club industry? Which of the five competitive forces is strongest and why? Competition in North American wholesale club industry is mainly about offering lower prices than other competitors. But with this low price that warehouse clubs are offering, they still have to offer something different in order for them to generate more income and get more clients than their competitors. The strongest among the five competitive forces is the rivalry among competing sellers. From all the membership warehouse and clubs, they are competing too much considering that they all offer at lower prices. They need to offer something different wherein the other competitors shouldn’t have to be able to achieve a competitive advantage. They are competing in same market and that is by selling those manufactured goods at almost same price levels. 2. Do all three warehouse club rivals – Costco, Sam’s, and BJ’s Wholesale – have highly similar strategies? What differences in their strategies are apparent? Does one rival have a better strategy than the others? Does one rival have a somewhat weaker strategy than the other two? Yes, these three have highly similar strategy being used. Costco, Sam’s and BJ’s offer low cost, and that’s mainly their similar strategy. Costco follows the strategy wherein they would offer...
Words: 624 - Pages: 3
...Competition among the North American Warehouse Clubs: Costco Wholesale versus Sam's Club versus BJ's Wholesale The company competitive strategy are the specific moves that help the company please the customers, make offensive and defensive moves to beat the competition, and how it responds to changing market conditions. The five generic competitive strategies describe the five methods firms use to generate their strategic options. Firms use a low-cost provider strategy, a focused or market niche low cost strategy, a focused or market niche differentiation strategy, a best-cost provider strategy, or a strategic combination of all five. The North American warehouse clubs case show how Costco Wholesale, Sam’s Club, and BJ’s Wholesale are using strategy to try and win customers. The membership warehouse club began in 1976 and after a rocky start, has expanded to a global industry. Costco and Sam’s Club began in 1983 and BJ’s followed in 1984. These three companies have been in a competitive battle ever since. Costco Wholesale’s strategy is based on being the low-cost leader. Successful low-cost leaders are exceptional at finding ways to drive costs out of their business and still provide a product or service that buyers find acceptable (Thompson, Strickland, & Gamble, 2012). Costco uses a focused or market niche low-cost strategy to keep their prices down and earn repeat customers. Costco would only stock items that could be priced at a bargain...
Words: 579 - Pages: 3
...GESTEWITZ | Assignment 1: Competition among the North American Warehouse Clubs Date: 7-08-2012 | 1. Competition like in the North American wholesale club industry: - In North America discount warehouse and whole club segment has $125 billion market shares captured by Costco, Sam’s and BJ’s. There is high competition in the whole club sector, because every firm wants to enter a more profitable market by offering low prices with top quality products to grab customer attention. To attain this they have low operating cost and low labor cost to operate their facilities. They dictate the suppliers for price, deliveries and payment terms. As it indicates the suppliers have to wait for 30 to 60 days for their payments after the delivery is done. Other than general customers these clubs are attracted small business owners, churches and non-profit organizations. To increase the profit margins they introduced annual membership fee collected from customers to purchase products in whole sale clubs. Among the three whole sale clubs Costco and Sam’s club are in various states and have also established themselves internationally. But BJ‘s has limited their store to eastern seaboard of the US only and its market share is not affected by other two clubs at their positions. BJ’s accepts coupons which add value to its customers. This is an advantage to BJ’s and a disadvantage to the other two firms. BJ’s does have same competition levels of the other two clubs to participate in rivalry. When...
Words: 1749 - Pages: 7
...2.1 Resources 2 Revenues of 71 Billion 3 550 Warehouses Today – Operates in: 40 States 9 Countries 4 $137 million average sales/warehouse 5 141,000 square feet/warehouse 6 143,000 employees worldwide 7 More than 1.4 million transactions/day Until 2009, Costco made 71billion revenues, and 550 warehouses covers 40 states in 9 countries. i would say that their competitive advantage is that they sell in bulk and often offer a better price per unit, so more people want to buy there. Also, i think that they make alot of their money on membership fees each year. another thing that Costco does is have free samples just about every day of the week. i think that this draws in customers and often times, gets consumers to buy more products (at least i know that this is the case for me) 13. Low pricing Wal-Mart as at the time of this writing is the most capitalized company in the world. Thanks to its low pricing strategy that became its strong source of competitive advantage. Low barrier to entry We live near a Costco and a Sam's, and the Costco is better in many many ways. And you can use a debit card there. And I personally won't support the WalMart empire, so that's another negative on Sam's for me (and we need not go there as that has been discussed to death in this forum as well). I just like the service better at Costco, layout, selection, etc. We seem to have a thread about this every other week...LOL. It really depends on what you buy, how...
Words: 2502 - Pages: 11
...in the world. It is leading the discount warehouse and wholesale club segment of the North American retailing industry. As of 2012, Costco had a total of 598 warehouses internationally. Costco’s fiscal 2011 total revenue was $88.9 billion and net income was $1.46 billion. Additionally Costco had $1.9 billion of membership fees revenue acquired from 25 million households and 6.4 million businesses making it the leader in the wholesale, membership industry. The annual sales for one of Costco’s competitors, Sam’s Club, averaged $146 million with a $78 million average per store. Costco’s business model aims to generate high sales volumes and rapid inventory turnover by offering fee-paying members attractively low prices on a limited selection of nationally branded and selected private-label products in a wide range of merchandise category. Rapid inventory turnover, low operating costs through purchasing high volumes, efficient distribution, and reduced merchandise handling costs are the major factors that make Costco profitable with relatively lower gross margins than other wholesale competitors. Also, the membership fee required from customers is a major revenue source thataccounts for approximately 70 percent of its total revenue annually. Additionally, Costco has direct buying relationships with many of its vendors. The company also establishes strategic relationships with manufactures to introduce co-branded items. Costco warehouse managers delegate considerable authority...
Words: 2955 - Pages: 12
...Code: GDRT28577FSA Publication Date: 10-Oct-2014 Company Snapshot Company Overview Key Information Costco Wholesale Corporation (Costco) is membership warehouses chain operator. The company's product portfolio includes sundries, hardlines, food, softlines, fresh food and ancillary. It offers two types of memberships, namely, business and gold star to its customers. Costco operates gasoline stations in the US and Canada. Costco offers its products online through websites including costco.com in the US and costco.ca in Canada. The company carries out the manufacture of products through Costco Wholesale Industries and operates about 663 warehouses. Geographically, the company operates in various countries including Taiwan, Korea, Mexico, Australia, the UK, Canada and Japan. Costco Wholesale Corporation, Key Information Web Address www.costco.com Financial year-end September Number of Employees 103,000 NASD COST Source : GlobalData Key Ratios Costco Wholesale Corporation, Key Ratios P/E 27.81 EV/EBITDA 18.25 Return on Equity (%) 18.82 SWOT Analysis Debt/Equity 0.48 Costco Wholesale Corporation, SWOT Analysis Strengths Weaknesses Operating profit margin (%) 2.90 Diverse Product Mix Dividend Yield 0.01 Dependence on the North American Market Value-Added Services Note: Above ratios are based on share price as of 08-Oct-2014 Strong Financial Performance Source : GlobalData Opportunities ...
Words: 2105 - Pages: 9
...Porter’s analysis: 2. The second factor is rivalry among existing firms. * Office Depot’s major competitors include: IKON Office Solutions, Staples, United Stationers, OfficeMax, and Wal-Mart Stores. The competition among these firms is highly intense. Another competitor is Fedex Kinko’s (14% of the market segment) * Staples, Office Depot and OfficeMax) comprise about 11% of the market combined. * print and ship services are approximately 17%, ranking it as one of Office Depot's most profitable offerings * Office Depot, Staples and Officemax are the market leaders in the office supply industry. However they only account for 10% of the market. The rest is divided widely between supermarkets, wholesale retailers, discount stores (including Wal-Mart) and smaller independent companies. * Office Depot has made efforts to increase its profitability by offering copy and print services, * One advantage Office Depot has over Staples is its international market. * Company has integrated copy and print services into retail and commercial businesses. Staples provides those services as well= intense competition among rivals. * In an effort to increase their sales, Office Depot decided to implement direct sourcing, which allows companies such to offer its own line of private label goods, and branded goods. Office Depot and Staples are very competitive in this regard, with about one-fifth of all goods sold coming from respective private labels. * We...
Words: 3614 - Pages: 15
...founded by Jim Sinegal and Seattle entrepreneur Jeff Brotman. Operation of the first store of Costco began in 1983. There were nine Costco stores in five states by end of 1984. Costco became a public company for raising additional fund for business expansion in December 1985.Costco successful to reach one billion dollar in sales in less than six years which make the company the first ever United States (U.S) that reach that huge amount of sales. Costco merge with Price Club in year 1993 and came out with name of PriceCostco. Later, the name was changed to Costco Wholesale Corporation in August 1999.This warehouse club chain have 57 million members. It sales volumes only based on its members as it only open to their members and guests. Costco is the fourth largest retailer in the US and is the seventh largest in the world. Currently, Costco holding market share or in other words industry standing of US and Canada is about 55% . Whereas its close competitor Sam's Club market share is about 36% and 9% by BJ’s Wholesale Club. Costco offer tremendously lower price products with good quality and branded name. The price which are offer by Costco much lower compare to other conventional wholesale or retail that sell similar items and products. Profit generated by the company from its membership fees is about one billion with E- commerce sales contributing about five hundred and thirty four million. It was estimated that the renewal rate of the card holder is about 86.5%. COSTCO'S MISSION...
Words: 6603 - Pages: 27
...Week 2 case 4 Competition among the North American Warehouse Clubs: Costco Wholesale Club vs. BJ’s Wholesale Overview Costco and BJ’s are both wholesale stores. They offer a variety of products sold in case lots, furniture, food, household products, clothing, books, DVD’s, and many other bulk products. They limit their products to brand names and store product names. They offer bulk items at a lower cost than a typical grocery store. They are kept in warehouse stores which cost the companies less with cheaper shelving and store lighting fixtures. Low operating costs allows these wholesalers to charge much lower prices. These warehouses are very attractive for business owners, caterers and non profit organizations. They can get their products of greater quantity at a much lower cost. There are more than 1250n warehouses in Mexico, Canada and the U.S. 56% percent of them alone are in the United States. These warehouses have competed with Kohl’s, Target, Office Depot, Best Buy and Wal-Mart to name a few. The first warehouse was introduced by Sol Price in San Diego California in 1976. They lost money in their first year of operation but by 1979 had 2 stores. Before then they experimented with a retailer called Fed-Mart. Jim Sinegal who is the cofounder and CEO of Costco worked for Fed-Mart as a teenager. When Sinegal was 26 Sol Price made him the manager of the original store in San Diego. The first Costco store opened in 1983 the same year Sam’ Club opened. By 1984...
Words: 873 - Pages: 4
...International Expansion Growing Demands of private labels | Threats –Competition Internet Retailer gaintsIncrease Labour and healthcare cost | Strength (Internal Forces) : * Pricing Authority - Costco’s philosophy is to provide its members with quality goods at the most competitive prices. It does not focus its efforts on maximizing prices in the short term, but instead focuses to maintain a perception among its members of “pricing authority”, or consistently providing the most competitive prices. These bring customers back to the warehouse, since they have the belief that they are in fact getting the best price on a wide array of products. The company also uses its gasoline business to draw members to warehouses. While this business is relatively lower margined than others, it again drives higher volumes of other higher-margined products. * Brand Loyalty : Costco’s relentless pursuit of offering high-quality products and offering great value has allowed it to attract a very loyal customer base. This has allowed the company to grow market share and increase its customer base over the years. * Higher Revenues - Costco has rapid inventory turnover combined with high sales volume, contributing to higher revenues. The high sales volume ensures high revenues in spite of low selling prices. Weaknesses (Internal Forces) – * Geographic Dependence: Costco’s performance is highly dependent on its North American business. Sales in the U.S. and Canada represented 87% of the...
Words: 1174 - Pages: 5
...LAMAR UNIVERSITY - COLLEGE OF BUSINESS MGMT5380 - STRATEGIC MANAGEMENT Brad Mayer: Galloway 204 (880-2383); bradley.mayer@lamar.edu Office Hrs: MWF 9:20-10:20 AM (and by appointment) The mission of the College of Business at Lamar University is to provide a quality education to a diverse student population from Southeast Texas and beyond, resulting in well-rounded business professionals who are prepared to meet the challenges of a dynamic global environment while upholding ethical values and encouraging civic and social responsibility. The faculty promotes an environment supportive of applications-oriented learning by engaging in a balance of discipline-based, business pedagogy, and practice-based intellectual contributions. I. Catalog Description: The capstone course for the MBA. The course assumes that the company success depends upon formulation of an astute “game” plan and the ability to implement and execute that game plan proficiently. The purpose of the class is to enable students to “think strategically,” consider the total enterprise, and to make long-term decisions in a global market environment. A prerequisite for the Integrative Case Study. II. Prerequisites: - Student must be in last semester of course work and have approval of advisor. - Justification: This is a capstone course that draws upon all of the MBA core courses and stresses complex and interdisciplinary applications of the combined theories and experiences of these...
Words: 4016 - Pages: 17
...Competition Among the North American Warehouse Clubs: Costco Wholesale vs. Sam’s Club vs. BJ’s Wholesale 11/1/2013 Provide an overview of the company and/or industry and add any pertinent information relevant to the case (5 points) The Warehouse club retail industry was first started back in 1976. It currently consists of 3 main players: Costco Wholesale, Sam's Club and BJ's Wholesale club. These no frill, big box retailers offer discounted merchandise including such items as food, clothing, household goods, cleaning supplies, office supplies books, DVD's and some furniture. Items sold are usually in larger packages than offered in other retail stores. Warehouse clubs attract consumers such as families, businesses, churches and other organizations. It is hard for other retailers such as supermarkets, department store,. office supply stores, along with others to compete with wholesale club pricing. Clubs are able to keep pricing low due to bulk purchasing along with no frill overhead and low labor costs. . 1. Do all three warehouse club rivals – Costco, Sam’s, and BJ’s Wholesale – have highly similar strategies? What differences in their strategies are apparent? Does one rival have a better strategy that the others? Does one rival have a somewhat weaker strategy than the other two? (15 points) All three warehouse club rivals have some similar strategies. All practice the low cost provider strategy Their strategies are to offer...
Words: 1281 - Pages: 6
