Transcript costcorevised.ppt

Daniel Bernards
Austin Hutcheson
Nicole Stefanek
Company Overview
Costco operates an international chain of
membership warehouses, mainly under the
“Costco Warehouse” brand name
 Headquarters are located in Issaquah,
Washington and employs about 142,000
people nationwide
 Provides a limited selection of nationally
branded and private-label products across
a wide range of merchandise categories at
lower prices than competitors
 Known for their bulk merchandise

Company Overview
Recorded revenues of $72,483 million in
the financial year ending in August 2008
 Net profit was $1,282.7 million in the same
financial period
 Size of stores range from 70,000 to
205,000 square feet
 Carries an average of about 4,000 active
SKU’s per warehouse, compared to
competitors averaging about 40,000 to
140,000 SKU’s

Primary Merchandise Offerings

Broad categories include:
 Sundries, hardlines, food, softlines, fresh
foods

Besides branded products, Costco
offers a range of private label products
under the brand name Kirkland
Signature
 Various categories: juice, cookies, coffee,
tires, housewares, luggage, appliances,
clothing, detergent
Other Retail Formats
“Costco Home”
 Offers home furnishings and décor products including window
treatments, carpeting, and cabinetry
 Locations: Washington, Arizona
 “Costco Business Center”
 Customized products for food service, convenience stores and
offices
 Office supplies, furniture, machines and break room supplies,
convenience store supplies and resale items, espresso
shop/stand supplies, restaurant supplies, equipment, and
ingredients

Strengths

Strong market position
 5th largest retailer in the US and 8th largest in the
world
 Ranked 29th in the Fortune 500 list of America’s
largest corporations based on sales

Rapid inventory turnover rate
 High inventory rate reduces cost and shrinkage
 In 2008, inventory turnover rate was 12.8, compared
to its competitors:
○ BJ’s Wholesale Club 9.4
○ Wal-Mart 8.3
○ PriceSmart 8.9

Low Marketing Costs
Weaknesses

Concentrated presence in California
 27% of net sales in 2008

Lax quality control
 Purchases from foreign and domestic
vendors gives them limited control over the
quality of the products
Opportunities

Growth in online retailing
 Retail spending in U.S. was $128 billion in
2007, and is expected to reach $215 billion
by 2012

Shifting of consumer demand towards
private label products
 The purchase of high priced items has
shifted to affordable private label products
Threats

Impact of intense competition
 Wal-Mart’s Sam’s Club, BJ’s Wholesale
Club, and Target

Consumer confidence
 Economic slowdown in the global economy
 Affects the discretionary consumer spending
as consumer gets cautious about job
security and debt level
Sources
 http://www.costcoauto.com/default.aspx
 http://www.costco.com/
 http://www.suncoraz.com/images/PICT0151_000.JPG
 http://static.px.yelp.com/bphoto/cY32swx8bHTFnn13mJnlOw/l
 http://www.youtube.com/watch?v=3LR7ZhdGXXg