The goal of this memo is to analyze Costco’s performance in comparison to Sam’s Club and BJ’s. Costco Wholesale Corporation is actually a wholesale club that requires customers to get annual memberships so that you can shop at their stores. Costco’s main competitors were Sam’s Club and BJ’s Wholesale. Costco bought Price Club in 1993 which enabled it to live within the competitive wholesale industry. It also adopted a technique which was different in comparison with its major competitor, Sam’s Club This enabled Costco to be the largest wholesale club in the business in 2001.
Costco’s Performance in terms of BJ’s – After 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 in an increasing rate with the exception of year 2000 to 2001. BJ’s on the other hand, had growing revenues until 1999 when their revenues then began to grow at a declining rate.
Costco includes a higher membership fee and more and this enabled https://www.storeholidayhours.org/costco-wholesale-holiday-hours-open-closed-today to become more than BJ’s. This membership fee is essential since it is the primary contributor to the company’s bottom line 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 only have warehouses in the united states. However, Costco has a lower operating and gross margin which shows that BJ’s has more efficient operations and higher product prices than Costco. Costco’s inventory turnover ratio is outstanding since it is much larger than BJ’s. This clearly shows that Costco comes with an excellent operating efficiency.
Costco’s Performance in Relation to Sam’s Club – Sam’s Club, on the other hand, has more members and warehouses when compared with Costco that makes it Costco’s largest competitor. However, Costco had larger total revenues, sales per store and operating income because of its strategy. This can be because Costco is a lot more internationally dispersed when compared with Sam’s Club since 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 data is joined with Walmart.
III. Costco’s core strength and strategy – Costco pursues the technique of focusing on lowering the unit price of goods and purchasing 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 to create value to the customers. Their core strength could be split into two:
• Targeting a wealthier selection of small businesses proprietors and middle-class shoppers which is different from Sam’s Club.
• Refusing to mark up products a lot more than 14 percent on the distributor’s price
Costco’s strategy is really efficient in providing it with a competitive edge over its competitors BJ’s and Sam’s Club. This is undoubtedly a long term value enhancing strategy because Costco’s main goal is always to ctqosf value for their customers. They will likely definitely obtain many loyal and satisfied customers who do not mind paying a higher membership fee to sign up for Costco. Costco is yet another very ethical company because they are not implementing a strategy which serves to reduce their costs and cheat customers of the money in an indirect way.
We have been part of Costco for a couple of yrs having a business professional membership. I personally use Costco for many of my company purchases so I switched to only using Costco rather than having both memberships. Bjs and Costco carry the majority of the same things. Costco features a more ofice supplies, toys, etcs I need for my online retail business.
I feel Costco and Bjs are equally professional and provide good customer care. BJs has the advantage of accepting MFR coupons and accepts all major charge cards! Costco only accepts checks and American Express within their warehouses (they are doing accept all major charge cards online though) BJs lines seem to move quickly, along with their aisles, a minimum of on the ones I actually have gone to, are better organized.