Cosco Case Study Example | Topics and Well Written Essays - 750 words

Cosco - Case Study Exampleal., 2008, p. C-3). While this lineage dumbfound has been entirely successful thus far, the provision of limited choices can be problematic in the long-term. With globalization consumers are increasingly confronted with a variety of choices. Therefore shopping in an environment with limited choices may go against what new(a) consumers do come to expect and prefer. Costcos business model has nevertheless been successful so far. For example in 2006, total sales in Costcos 496 stores worldwide amounted to US$ 59 billion. Membership included 26 million private members and 5.2 million business members which amounted to US$1.2 billion in fees for Costco membership. Each of Costcos stores realize sales each year at an average of US$128 million while its closest competitor Sams Club realizes notwithstanding US$67 million annually (Thompson, et. al., 2008). However, since Costco and Sams Club are based on the same business model, the disparity in sales might be a matter of concern. Costco can expect that at some stage Sams Club will attempt to get by some of Costcos market shares and the sales positions can be reversed. ... For example, operating costs increased progressively from US$1,037 million in 2000 to US$1,626 in 2006. However, net sales and membership fees together increased from US$32,164 million in 2000 to US$60,151 million in 2006 showing progressive increases from year to year. At the end of 2000, Costco had 313 stores operating worldwide and by the end of 2006, Costco had 458 stores. Membership has also followed a similar pattern, increasing each year from 2000-2006 (Thompson, et. al., 2008). Although membership is a striking part of the business model it is a more significant marketing strategy and will be critiqued in the next section. The successful business model of offering quality goods at low prices is enabled by the warehouse membership set-up. By taking this approach, Costco is able to save the cost involved in in- store decorousness and in-store customer service. In fact, Costcos various warehouses typically display bare cement floors and shopping is designed like a treasure hunt experience (Thompson, et. al., 2008, p. C-6). Moreover, Costco offers limited products in volumes to lower the cost of inventory and floor management. For example, a typical supermarket or supercenter such as Wal-Mart or SuperTarget will offer amongst 40, 000 and 150,000 items while Costco offers only 4,000 items (Thompson, et. al., 2008). Thus far, Costcos business model has been successful, however increasing competition indicates that Costco might have to consider revamping its business model. For instance, Costcos largest business rival, Sams Club and BJs both use a similar business model. Both Sams Club and BJs have similar in-store lay-outs, offer about 4,000 items and feature the treasure hunt experience in which luxury goods are available at lower