The goal of this memo is to assess Costco’s performance compared to Sam’s Club and BJ’s. Costco Wholesale Corporation is a wholesale club that needs customers to buy annual memberships to be able to 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 method that was different when compared 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 Relation to BJ’s – Once I compared Costco’s total revenues with BJ’s total revenues in Exhibit 5 of FIN 197 Seminar in Finance case book, I realized that Costco’s total revenue were increasing at 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 begun to grow in a declining rate.
Costco includes a higher membership fee and more which enabled costco Sunday hours to become more than BJ’s. This membership fee is vital as it is the main reason for the company’s bottom line since sales excluding membership fees barely covers operating expenses. Costco also has more warehouses and a lot higher sales per store. Costco has warehouses in lots of international locations while BJ’s just have warehouses in the US. However, Costco features a lower operating and gross margin which implies that BJ’s has better operations and better product prices than Costco. Costco’s inventory turnover ratio is outstanding as it is much larger than BJ’s. This clearly shows that Costco posseses an excellent operating efficiency.
Costco’s Performance with regards to Sam’s Club – Sam’s Club, on the other hand, has more members and warehouses in comparison with Costco making it Costco’s largest competitor. However, Costco had larger total revenues, sales per store and operating income because of its strategy. This is also because Costco is much more internationally dispersed compared to 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 information is joined with Walmart.
III. Costco’s core strength and strategy – Costco pursues the technique of concentrating on reducing the unit value of goods and purchasing few Stock Keeping Units (SKUs) looking at the vendors which enable production savings. Costco’s core strength is designed to provide it with higher total revenues and to create value to its customers. Their core strength may be separated into two:
• Targeting a wealthier selection of small businesses and middle-class shoppers which is different from Sam’s Club.
• Refusing to mark up products a lot more than 14 percent over the distributor’s price
Costco’s technique is really efficient in providing it having a competitive edge over its competitors BJ’s and Sam’s Club. This is surely a long-term value enhancing strategy because Costco’s primary goal would be to ctqosf value to their customers. They will definitely obtain many loyal and satisfied customers that do not mind paying a higher membership fee to sign up with Costco. Costco is another very ethical company since they are not implementing a method which serves to reduce their costs and cheat customers of the cash in an indirect way.
We have been a member of Costco for a couple of yrs with a business professional membership. I personally use Costco for a lot of of my business purchases therefore i switched to only using Costco as opposed to having both memberships. Bjs and Costco carry a lot of the same things. Costco includes a more ofice supplies, toys, etcs I would like for my online retail business.
I feel Costco and Bjs are equally professional and offer good customer service. BJs has the advantage of accepting MFR coupons and accepts all major charge cards! Costco only accepts checks and American Express in their warehouses (they do accept all major bank cards online though) BJs lines appear to move very quickly, and their aisles, at the very least on the ones We have gone to, are better organized.