Costco Analysis
Costco: Weakness of Three Aspects, a Company, Diversity, and Globalization
INTRODUCTION
The history of Costco “We are a membership warehouse club, dedicated to bringing our members the best possible prices on quality brand-name merchandise.” Costco Wholesale Corporation is one of biggest wholesale corporations in the United States and several other countries. The story of Costco’s rise from a single Seattle store in 1983 to a multinational chain of enormously profitable warehouses is a tale of perfect leadership in a rapidly-changing retail world. The company’s first location was in 1976 under the name Price Club which was established by Sol Price. Jim Sinegal launched a competing company with an idea of a wholesale business, Costco. The two businesses eventually merged in 1993, and Sinegal went on to educate Sol Price on the art of getting the right product in the right place for the right price. When Costco and Price Club merged in 1993, the operation under the name “PriceCostco” had 206 locations generating $16 billion in annual sales. Since resuming the Costco name in 1997, the company has grown to more than 500 locations worldwide. After opening the first Costco warehouse located in Seattle, WA, U.S.A. Costco became the first company ever to grow from zero to $3 billion in sales in less than six years.
Costco’s strategy There are several factors for Costco to increase its growth under the strategy of the right products in the right place for the right price. The first being the right products, operating with malls becomes an important part of its growth. Costco chairman Jeffrey Brotman forecasts that malls will play a vital role for the company in cities such as Los Angeles. For example, when Costco opened a store at Spotsylvania Mall in Fredericksburg, Virginia, the mall reported double-digit sales gains for a year. Costco placed its wholesale warehouse within a mall setting with other retailers. While shoppers ventured to shop in the mall, they
INTRODUCTION
The history of Costco “We are a membership warehouse club, dedicated to bringing our members the best possible prices on quality brand-name merchandise.” Costco Wholesale Corporation is one of biggest wholesale corporations in the United States and several other countries. The story of Costco’s rise from a single Seattle store in 1983 to a multinational chain of enormously profitable warehouses is a tale of perfect leadership in a rapidly-changing retail world. The company’s first location was in 1976 under the name Price Club which was established by Sol Price. Jim Sinegal launched a competing company with an idea of a wholesale business, Costco. The two businesses eventually merged in 1993, and Sinegal went on to educate Sol Price on the art of getting the right product in the right place for the right price. When Costco and Price Club merged in 1993, the operation under the name “PriceCostco” had 206 locations generating $16 billion in annual sales. Since resuming the Costco name in 1997, the company has grown to more than 500 locations worldwide. After opening the first Costco warehouse located in Seattle, WA, U.S.A. Costco became the first company ever to grow from zero to $3 billion in sales in less than six years.
Costco’s strategy There are several factors for Costco to increase its growth under the strategy of the right products in the right place for the right price. The first being the right products, operating with malls becomes an important part of its growth. Costco chairman Jeffrey Brotman forecasts that malls will play a vital role for the company in cities such as Los Angeles. For example, when Costco opened a store at Spotsylvania Mall in Fredericksburg, Virginia, the mall reported double-digit sales gains for a year. Costco placed its wholesale warehouse within a mall setting with other retailers. While shoppers ventured to shop in the mall, they
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