Costco Notes

Costco's Members
- Academics, homeowners, with incomes above $100,000 per year.
-Relying on members using word-of-mouth to attract new members.
-71 million members today, with a 90% renewal rate/year.
- At $55/$110 per membership, Costco makes almost 4.2 billion dollars before anyone buys something.

Costco Retail Strategy -LIMITED PRODUCTS
Despite Costco's large store volume, limited number of products (10,000 compared to 40,000 in most of the largest supermarkets and 100,000 in Wal-Mart).
- Selling fewer items increases sales volume and helps drive discounts.
-People don't buy when there are too many options.

Costco Retail strategy LIMITED SIZE SELECTION
 -  People go to Costco to buy in bulk.
- Buying large amounts of products helps keep costs down.
-Supersize is the only size.

 - planogram
is a diagram that shows how and where specific retail should be placed on retail shelves or displays in order to increase customer purchases.

Costco Retail Strategy
(1) All stores have same look
(2) minimal in-store sinage
(3) no advertising
(4) no frills
(5) small mark-ups
(6) aims for high-end customers
(7) luxury items through grey market, outside of manufacturer's authorized trading channels
(8) Refining selections (treasure hunt)
(9) theft prevention ( more employees than customers) (10) Tires and Gas - reduced prices, lifetime guarantees

Costco Personnel Strategy
(1) better pay for workers - seen as investment
(2) healthcare benefits
(3) works with unions

Costco Strategic Partners
American Express

Costco vs. PriceClub Leasing vs. Buying
(1) Leasing benefits are- you have more money to invest in further expansion of your business you are not bound to the place, long-term contracts, can relocate if needed (2) Buying benefits are - you can make a lot of money of selling it for more expensive later, as real estate prices can go up and you don't loose from increased rent prices, which are unstable