1. Submitted by:Priyanka Thakkar(54) Ishani Chokshi(08)Niti Patel(36)Ankit Manek(23)

2. Introduction Founded in 1983 CEO: James Sinegal Headquarters: Issaquah, Washington. Inception: Seattle, Washington 1983 Stock Symbol: COST (NASDAQ) Founders: James Sinegal & Jefferey Brotman Seventh largest retailer in the world Fastest growing company in the history among American businesses 3. History Warehouse retailing. Meaning Price club-1st warehouse retailer 4. Costco Zero to Six years- $6 billion sales Philosophy -keep members coming in to shop by wowing themwith low prices. Does not engage in extensive advertisements or sale campaigns. Five Guiding Principles Take care of members Take care of employees Respect suppliers Reward shareholders Obey the law 5. Creative Exposure Consulting 6. Key Information Number of warehouses Membership Data 605 (as of 6/29/12)66.5 million cardholdersAreas of operation36.4 million households26.4 million Gold Star438 locations: 40 U.S. States10 million Business82 locations: Canadian22 locations: United Kingdom8 locations: Taiwan Warehouse sizes7 locations: Korea73,000 to 205,000 square feet13 locations: Japan (average 143,000 square feet)3 location: Australia Annual revenues32 locations: 18 Mexican states (FY11 - Ended 8/28/11): Number of employees$88.9 billion(worldwide)160,292 full and part-time 7. Departments & Services 8. Departments & Services 9. Costco ConnectionMagazineCreative Exposure Consulting 10. Kirkland Signature In 1995, Costco created the Kirkland Signature label, namedafter the city of Kirkland, Washington, where the Home Officewas located at the time. Kirkland Signature is a $4 bn brand. Toilet Tissue is the most popular Kirkland Signature product. 11. Kirkland Signature ProductsSome of the most popular items include Toilet tissue Spring water Assorted nuts Jeans Belgian chocolates Vodka Washing powder Cookware sets Bed linen Wine 12. Kirkland Signature Products 13. Membership Costco has two types of membership, Business and Individual,both membership types can be upgraded to Executivemembership program- which allows to earn a 2% reward onmost purchases, along with other benefits. Business members generally paid an annual membership feeof $100 for the primary membership card. Individual members generally paid an annual membership feeof $50. 14. Product Diversification Core - Costco Wholesale Warehouse Clubs and Superstores Premium private-label products Specialty - Consumer Services Travel Optical Automotive Financial Services 401(K) Loans Insurance Pharmacy Recycle electronics 15. Costcos PODPricing Top-quality national and regional brands at lower prices They markup on brand-name merchandise at 14 % (comparedto 20 to 50 percent markups at other discounters and manysupermarkets). Markups on Costcos 400 private-label is 15%. 16. Justification by James Sinegal :Were very good merchants, and we offer value. The traditional retailer will say: Im selling this for $10. I wonder whether we can get $10.50 or $11. We say: We selling this for $9. How do we get it down to $8? We understand that our members dont come and shop with us because of the window displays or the Santa Claus or the piano player. They come and shop with us because we offer great values. 17. Product Selection Typical supermarkets stocked about 40,000 items A Wal-Mart Supercenter or a SuperTarget have as many as150,000 items. Costcos merchandising strategy was to provide memberswith a selection of only about 4,000 items. 18. Justification by James Sinegal: If you had ten customers come in to buy Advil, how many are not going to buy any because you just have one size? Maybe one or two. We refer to that as the intelligent loss of sales. We are prepared to give up that one customer. But if we had four or five sizes of Advil, as most grocery stores do, it would make our business more difficult to manage. Our business can only succeed if we are efficient. You cant go on selling at these margins if you are not. 19. Treasure-Hunt Merchandising About one-fourth of its product offerings are constantlychanging. The idea is to entice shoppers to spend more than they mightby offering irresistible deals on luxury items. 20. Justification by James Sinegal, Of that 4,000, about 3,000 can be found on the floor all thetime. The other 1,000 are the treasure-hunt stuff thatsalways changing. Its the type of item a customer knows theybetter buy because it will not be there next time, likeWaterford crystal. We try to get that sense of urgency in ourcustomers. 21. Competitive Advantage Finding and negotiating bargains On quality merchandise Building relationships with Manufacturers Suppliers IngenuityCost cuttingConservation Human Resources Employing the best talent 22. SWOT AnalysisStrengths WeaknessesLow Prices Burden of high wages paidStrong Brand to workerLow price marginsOperating Efficiency E-commerce activitiesExceptional WorkforceSmall Marketing budgetStrong membershipcompared to discountretailers and super marketsOpportunitiesThreatsAppeal to conscientious Aggressive priceshopperExpand into foreign stablecompetition by rivalsmarketsPolitical complications inMergers & Acquisitionsforeign marketsMassive supplier pool Cannibalization 23. Strategic Benefits Remain focused on core business Maintain First Mover Status Increase internationalization opportunities 24. Costco Strategy for theFuture The primary objective of Costco Corporation is the administrationof the network of subordinate warehouses, which provide qualitygoods for competitive prices. The level of the prices established within the network is usuallylower than those offered by the local competitors. Thus, the company assists local retailers to reduce cost andsuccessfully operate in the competitive environment. Besides, thecompany serves not only legal persons; any physical person maybecome the customer of Costco Warehouse as well. 25. Costco Advantages Convenience: Costco supermarket is maximum fifteenminutes drive from the point the customer is. Price: Costco stores attract numerous clients because of itsbusiness strategy of providing items in bulk and at low prices . o Sweater At other store- $20 At Costco-$15(Brand Nike) 26. Competitors Sams Club BJs Wholesale Club(both of which have similar business strategies to Costco) 27. Customer Costco targets independent small business owners who havetypically $100,000 or more of personal income Actual average Costco customer is women in largehouseholders with income of $50,000 or more Typically customer visits 8-11 times per year Goods are usually bulk-packaged o Marketed primarily to large families and businesses. Does not carry multiple brands or varieties o House brand to sell, under the Kirkland Signature label. Results in high volume of sales from single vendor, allowingfurther reduction in price, and reducing marketing costs. 28. Costcos Biggest Concern Over expansion Cannibalization of existing store locations As a result, the company has announced it will slow its domestic expansion plans and will look to international markets for future growth. 29. Retailing StrategyTarget Market Strategy Primary target market is small businesses Marketing teams contact local businesses, trying to persuade them into purchasing a business membership Direct mail marketing to attract potential customers that meet their customer profile Dependence of members using word-of-mouth to attract new members to the company 30. Retailing StrategyProducts Low prices on selected private and a limited selection of nationally branded products in a wide range of merchandise categories Kirkland Signature: currently carries 330 private label items which make up 15% of their sales (2006) Some offerings rotate in and out of the warehouse based on season, and other factors. 31. Retailing StrategyPromotions Advertising: Costco limits its advertisement to direct mail to potential new customers. Public Relations: Costco allows their customers to sample many of their products as they walk through their warehouse. Personal Selling: When a Costco warehouse opens in a given location, marketers contact businesses around the area to see if they would be interested in becoming a member. Sales Promotion: Costco limits its marketing and promotional activities to new warehouse openings. 32. Retailing StrategyPrice Aggressively buy from a handful of vendors. Drive the cost down for members and sell in volume. Individual memberships. Business memberships. 33. Retailing StrategyPersonnel and Customer Service Keeps labor costs low by squeezing more sales out of fewer people. Limits the amount of employees they have on the sales floor. No commissioned sales people that work at Costco: customers do not feel pressured by Costco workers to purchase a given product. 34. Retailing StrategyPresentation Warehouse-type setting. Merchandise is generally stored on racks above the sales floor and displayed on pallets containing large quantities of each item. First things: the most expensive products (diamonds, flashy toys). Understand their customers in a given location. 35. Customer Relationship ManagementServices Unconditional double guaranteeo On merchandise: Every product sell with a fullrefundo Refund membership fee in full at any timedissatisfied Unlimited Drink Bar Feedback Box Serve members free breakfast to know customers Focus on satisfying all the need of members 36. Recommendations Should avoid coming to India as it has to start everything fromscratch: o Awareness o Supplier Relationship o Huge Promotional Campaigns o Cut-throat competition o Government Policies Creative Exposure Consulting 37. Creative Exposure Consulting 38. Creative Exposure Consulting 39. Creative Exposure Consulting 40. Bibliography http://www.thehistoryofcorporate.com/companies-by-industry/traderetail/costco-wholesale/ http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-homeprofile http://www.costco.co.jp/eng/costco.htm http://www.costco.co.uk/ http://shop.costco.com/en/Membership/Welcome/Departments.aspx http://www.thepensters.com/araplelei/costco-strategy-for-the-future.html http://www.wikinvest.com/stock/Costco_Wholesale_(COST) http://articles.economictimes.indiatimes.com/2007-01-15/news/28381035_1_costco-wholesale-corp-retail-outlets-sam-s-club 41. THANK YOU