Costco Wholesale: Strategies, SWOT Analysis, and Recommendations

Running head: COSTCO WHOLESALE
Costco Wholesale
Name of the Student
Name of the University
Author Note

1COSTCO WHOLESALE
The business in the modern generation is getting significantly competitive with each
and every passing day and almost all the organizations, present in the market, are in need to
form effective strategy so that they can get some breathing space in the tough market
competition. Costco wholesale being a renowned name in the retail industry is also subjected
to the intense competition of global market and that made them reform some of their
strategies. The paper discuses one such case and evaluates the impact of the strategies along
with their implementation. Apart from this, the paper also conducts a SWOT analysis in
context of the strategy.
Strategies:
Product Selection:
Costco Wholesale was one of the few organizations with a large product chain
starting from fresh meats, seafood, vegetables, fruits, paper products, coffee, to dairy
products like cheeses. The list also includes DVD, light bulb, cookware electric toothbrushes,
vitamins, ceiling fans, toys, games and many more products. The strategy introduced by
Sinegal was to deliberately block the wide range of choices for a single product. The
organization introduced a single product to represent a single product category. Sinegal’s
explanation in the implementation was that the organization was ready to lose one or two
customers out of 10 owing to the topic of restriction in the selection of the products. The
organization is okay with this intelligent loss of sales but they do not want to make their
business difficult with the increment in the variety of the product category.
Pricing:
The organization was significantly focused in delivering quality at a significantly low
price as they correctly assessed the act that customers come to their shop not because of the

2COSTCO WHOLESALE
good environment rather they want the organization to think of the customers. The
organization reformed their pricing strategy in such a manner that their strategy had strong
emphasis on the ultra-low pricing and low markup on brand name merchandise even at 14%
compared to 20-50% of others (Barnes, 2013). The vision Jim Sinegal was clear and that was
to reduce the competition of the market by reducing the price of the products. Sinegal wanted
to make sure that the competitors of Costco get pissed off and consider others to be their
competitors rather competing against Costco.
Treasure Hunt Merchandising:
The organization was significantly concerned in creating the demand among the
customers where the plan was to offer such deals which will guarantee more amount of
investment from the part of the customers than they would have. This helps the organization
to generate amount of revenue. The organization was instrumental in mixing the featured and
treasure-hunt items which forced the customers to visit Costco more than the number of the
previous visits for the usual stock up trips (Courtemanche & Carden, 2014).
Low Cost Emphasis:
Jim Sinegal was significantly concentrated on decreasing the cost of the products by
reducing all sorts of operating cost related to the products like the costs associated with the
wholesalers and retailers including salespeople, fancy buildings, delivery and billings. The
strategy for the location of the warehouses was to consider the high traffic routes which will
be easily accessible by both small businesses and the residents with above average incomes.