Costco as very popular retail shop

Costco as very popular retail shop

Costco wholesale is a multi-billion dollar global retailer with warehouse club operations in eight countries. Costco’s first location, opened in 1976 under the Price Club name, was in a converted airplane hanger on Morena Boulevard in San Diego. Originally serving only small business, the company found it could achieve far greater buying clout by serving a selected audience of non-business members. With that change, the growth of the warehouse club industry was off and running. In 1983, the first Costco warehouse location was opened in Seattle. Costco became the first company ever to grow from zero to $3 billion in sales less than six years. When Costco and Price Club merged in 1993,the combined company, operating under the name PriceCostco, had 206 locations generating $16 billion in annual sales.



Price Competition

An offer may be judged to be less attractive when another segment receives a better price or promotional offer because differential treatment is “unfair”. (Anderson, Eric and Duncan Simester 2001). Why the price of products in Costco is much lower than other markets. In opinion, there are three key points should be mentioned.

Firstly, Costco has its own central transform system. Further more, the land built the mostly Costco is owned by Costco itself. Secondly, The Costco unique retail model, membership system, acquired huge advantage on sales gross profit. It is incredible that the annual membership fees acquired by Costco is equal to the cost of running the store. Thirdly, the main selling point of Costco is its bulk selling. The major customer group targeted by Costco is middle class families. The stronger purchasing power and large quantity selling ensured possibility that Costco can depress the price lower than other retailers.

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Goods and Services.


Services are refers to the production of an essentially intangible benefit or experience, the goods are tangible and make customers enhance their lives or solve problems. Few years ago, the Costco has gradually expanded their product categories and services. In the past, Costco only selling boxed product, the product only need to open will be packed shelves. Now, Costco selling a good deal with the other products, such as fruits and vegetables, meat, dairy products, seafood, baked food, flowers, clothing, books, software, home appliances, jewelry, art wine and furniture. Many stores also set the car repair services, drug store, eye clinic, photo shop and gas station. Costco has a very special rule is only members can buying the products, in other words, it is a services to protect the customers. Costco selling the cheapest products, but every customers need to sign into the members and pay the member’s fees(annual). So Costco make this rules to protect can buy enough product. Also this is the way Costco earn money. Costco select the most popular brands in the market. With the larger number of packaging, reduce the cost and increase the relative value. Costco also have many important goods, continue to introduce new features to increase the change of commodity. The Costco look like a big supermarket, when people after their shopping, Costco have relax area, then they are selling hot dog, pizza, ice-cream, can make the customers take a rest. For a company, the goods and service are both very important.



How Costco improve products/services?


Some people complain about the selection of a few varieties,because all products are carefully selected to ensure the quality of the product. Costco only choose the product that very popular in the market, to keep all products can be sale and less inventory.

COSTCO is a company for a wide variety of consumers, and the family is the main group, you can only buy a watermelon or buy a bottle of shampoo, although the shampoo bottle here are relatively large, but for finally, it’s a reasonable consumption. Compared to the wholesale market go with volume sales, Costco has a restriction of discount merchandise, about the reasons for the restriction, I think there are at least two, discount advertisements mails sent to the household to attract customers, when customers find a specific goods are sold out,they will feel disappoint. Also due to afraid of return policies, because the COSTCO return policies is very commendable, they will not ask the reasons, and even you do not have to speak, just take them back and get refund. Asking too much only lead to resentment, and it also reduce the efficiency of work, doesn’t make any sense! So it doesn’t matter whether it’s removed the packaging, trademark cut, even already been worn, or a half pizza… everything gets a refund. So it is necessary there is a restriction for discount good.




























Anderson, Eric and Duncan Simester (2001), “Price Discrimination as an Adverse Signal: Why an Offer to Spread Payments May Hurt Demand,” Marketing Science, 20 (3), 315–27.


Phalguni Soni Jan 19,2016 Why Costco’s Membership Loyalty is on the rise


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