The purpose of this memo is to assess Costco’s overall performance when compared with Sam’s Club and BJ’s.
Costco Wholesale Corporation is actually a wholesale club that needs customers to buy annual memberships in order to purchase 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 survive inside the competitive wholesale industry. In addition, it adopted a method that was different when compared with its major competitor, Sam’s Club This enabled costco address to become the biggest wholesale club in the business in 2001.
I. Costco’s Performance in Relation to BJ’s
Once I compared Costco’s total revenues with BJ’s total revenues in Exhibit 5 of FIN 197 Seminar in Finance case book, I found that Costco’s total revenue were increasing with an increasing rate excluding year 2000 to 2001. BJ’s on the other hand, had growing revenues until 1999 when their revenues then started to grow with a declining rate.
Costco has a higher membership fee and more and this enabled Costco’s total revenue to become greater than BJ’s. This membership fee is very important since it is the key cause of the company’s bottom line since sales excluding membership fees barely covers operating expenses. Costco also offers more warehouses and a lot higher sales per store. Costco has warehouses in numerous international locations while BJ’s just have warehouses in america. However, Costco features a lower operating and gross margin which shows that BJ’s has more effective operations and higher product prices than Costco. Costco’s inventory turnover ratio is outstanding since it is larger than BJ’s. This clearly demonstrates that Costco has an excellent operating efficiency.
II. Costco’s Performance in terms of Sam’s Club
Sam’s Club, on the other hand, has more members and warehouses in comparison with costco phone number that 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 compared to Sam’s Club as it has more warehouses in international locations. I am not able to compare Costco’s financial statement performance with Sam’s Club because Sam’s Club data is joined with Walmart.
III. Costco’s core strength and strategy
Costco pursues the strategy of centering on lowering the device cost of goods and getting 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 as well as to create value to the customers. Their core strength can be divided into two:
• Targeting a wealthier group of small businesses and middle-class shoppers which is different from Sam’s Club.
• Refusing to mark up products greater than 14 percent over the distributor’s price
Costco’s strategy is really efficient in providing it with a competitive advantage over its competitors BJ’s and Sam’s Club. This is undoubtedly a long-term value enhancing strategy because costco gas hours is to create value with their customers. They vpaisq definitely obtain many loyal and satisfied customers that do not mind paying a greater membership fee to join Costco. Costco is also a very ethical company since they are not implementing a method which serves to lower their costs and cheat customers of their cash in an indirect way.