Case write- up of Costco Corporation
Company Case Study
Costco Wholesale Corporation is the 5th largest retailer in the United States. This company buys the large quantities of consumer products from manufacturers or suppliers and sells them back in smaller quantities to the end users. Costco was founded in 1983 by James Sinegal and Jeffrey Brotman in Seattle, Washington (Costco website). According to Costco 2008 Annual Report, Costco is the largest membership warehouse club chain in the world based on sales volume. With 142,000 employees and more than 500 branches worldwide, Costco focus on providing inexpensive product in big box. Many of its products are up to 50% cheaper compared to other stores such as Wal-mart and BJ Wholesale Ralphs. In 2008 Costco was ranked as the 14th most admired company in the United States (CNNMoney, 2008)
Costco’s financial strength and diversification enables the company to maintain its strong market position in the industry. According to OneSource (2009), the company reported revenues of $72 billion in 2008, which was a 2% increase compared with $62 billion the previous year. According to the Costco Wholesale Corporation Company Profile (Datamonitor, 2009), 78.5% of total revenue comes from the United States, the company’s largest geographical market, it is an increase of 10.4% from 2007. Canada generates 14.5%, and the remaining 7% are from other branches such as Taiwan, Japan, South Korea, U.K. and Mexico. Compared with 2007 and 2008, the Canadian and other international markets’ revenue increased by 20.7% and 21.9% respectively. Based on the Onesource company report (2008), Costco’s revenues can be separated as follows: 22% from sundries, 19% from hardlines such as major appliances and electronics, 20% from food, 10% from softlines such as apparel and domestics, 12% from fresh food, 17% from ancillary and other such as gas stations, pharmacy, and food...