Costco Wholesale differentiated itself in a crowded market by offering a membership-only model to its customers.

Costco Wholesale differentiated itself in a crowded market by offering a membership-only model to its customers. With it, customers were able to buy bulk products at an attractive discount. Some of these products remain private and you can only find it (at an attractive price) at Costco warehouses.

Costco Wholesale has stores in over 600 locations across the United States and Canada. It is most known for its private product selection, exclusive membership, and positive treatment of its employees. Compared to other brands like Walmart, Costco offers benefits to employees, maintains an average wage of $20 an hour, and has a significantly reduced employee turnover rate.

If you want to shop at Costco, try the many food samplings they offer, or grab a $2 hot dog from their small food court, you need a membership first. The membership makes customers feel like they are part of an exclusive club. It helps Costco focus more on customer retention and loyalty something a lot of companies are forgetting these days.

Another way Costco has differentiated itself in the crowded market is by offering bulk products at discounted prices. It is one of the main reasons people sign up to go to Costco; they know they can walk out with hundreds of bulk products for much cheaper than buying them individuality elsewhere.

Since Costco prides itself on its low-cost model, any type of increase will affect the company’s profits. Considering most people love the discounts Costco offers, increasing costs will likely impact the company’s reputation negatively. Unfortunately, labor costs across the US are currently on the rise, and Costco needs to figure out how to handle this sooner than later. Competition is also on the rise. Costco is used to dealing with the big guys like Target and Walmart, but it still means Costco’s market share is limited. Now with these same guys focusing on ecommerce, it puts even more pressure on Costco.

Costco can create stronger presence through ecommerce. It’s the future of shopping, after all. And with everything Costco has to offer, it will be easier for it to build a strong community of online shoppers and supporters. It also allows Costco to offer even more products without having to put them on the floor of physical stores.

Another thing Costco can do to stand out is to offer even more private label products. And with more access to increased household income, customers can afford luxury items, clothing, and fancier brands. This is a benefit for the entire retail industry, Costco included.

Although you have the option to buy many products at Costco, compared to other stores, the selection is rather limited. The average amount of products circulating on the floor is 4000. In addition, Costco is affected by any product recalls, but especially produce recalls. Not only do the recalls affect sales, but it also harms Costco’s reputation. Customers are less likely to shop at Costco if they feel their health could be at risk.

Answer Notes:

• Students are required to identify 3strengths, 3 weaknesses, 3 opportunities, and 3 threats. Then prepare an analytical text for the case study.