The strategy of Costco was low prices, a limited product line and limited selection, and a “treasure hunt” shopping environment. In terms of pricing, Costco was known for selling top quality brands products at prices below other wholesale or retail outlets. Costco kept prices low to members and capped margins on brand-name products at 14 percent and 15 percent as well as on private label Kirkland signature items. However, unlike Wal-Mart or Target that provide wide ranges of product selections, Costco provided members with a selection of only about 4000 items. The product range did cover a broad spectrum of categories but each category had a limited selection and products were usually packaged in bulk and targeted to large families and businesses.
Running head: Dollar General 1 Dollar General Columbia College RUNNING HEAD: Dollar General 2 Dollar General Dollar General is the leader when it comes to discount dollar stores with an annual profit of more than $12.73 billion a year. The major competition in the dollar discount stores for Dollar General in order are Family Dollar and the Dollar Tree. Another key player in discount stores is Walmart, although not a dollar discount store Walmart dominates all markets with $419.24 billion in revenue. 2011 brought on a year of expansion for Dollar General with plans to open up 650 new stores and remodel another 550 creating 6.000 new jobs in additional employees. Dollar General in owned by Koldberg Kravis Roberts & Co. L.P (KKR) who own more than 79% of all shares in Dollar General.
These two retailers sell almost the same products and they have similar strategies which are low price and high-quality service. As the customers are price-oriented, the small companies and local retailers which are impossible to achieve the same low price can only compete through specialty products. For example: Frank’s Nursery focus on garden related products and Sears specializes in selling craftsman tools. What’s more, the home improvement industry’s expected revenue growth is only 5.39%. It means the competition will become more intensive.
They have a good variety of products to shop for. Wal-Mart has many competitors, but one of the strengths that the company has the ability to lower the prices for their customers need. Wal-Mart can be consider a unique store because of one special strategy that they have. The strategy consists of comparing the prices of the other stores, if the other store has an ad of a lower price than Wal-Mart, then they will give it to them to the same price. Many costumers is one of the plus that they give to Wal-Mart because this means that they don’t have to go store by store catching all the specials that they have.
By minimizing handling of goods through the use of direct shipments form the manufacturer to the store, as well as the use of cross-docking techniques where items are shipped to a cross-dock and then distributed to stores, Costco is able to minimize handling time. This minimized handling enables Costco to cut costs due to less labor involved. Costco also buys items from retailers on the grey market at deeply discounted prices that it can pass onto its customers. Often times, because Costco has such a rapid inventory turnover, Costco is able to buy products and sell them before the invoice is due, often taking advantage of early payment discounts, and in essence, the vendor finances purchase, and Costco is able to pass those savings onto its customers. I think that Cosco’s biggest weakness is that they are not overly forward-looking.
They do this to make money, but to save money too, as they focus on one group and advertise to it and thus they spend less money on more advertisement. I will be using 4 consumer products and 2 business to business products. 1. Gillette mach 3 turbo razor 2. Microsoft Xbox one 3.
Sam’s Club is the same way but it is geared towards companies and seems to sell more office supplies. Costco is rapidly expanding since they have noticed the two differences between BJ’s and Costco, with the intent for people to do one stop shopping for family and work all at one place. 3.) Out of Costco, BJ’s and Sam’s Club the strongest financial performer is Costco. Costco is making the most profit by the high amount of net sales and total revenue.
Discount Customers- Discount customers are also frequent visitors but they are only a part of business when offered with discounts on regular products and brands or they buy only low cost products. More is the discount the more they tend towards buying. These customers are mostly related to small industries or the industries that focus on low or marginal investments on products. Focus on these types of customers is also important as they also promote distinguished part of profit into business. Wandering Customers- These are the least profitable customers as sometimes they themselves are not sure what to buy.
Breakeven analysis is very useful as well as it is easy to change the graph in accordance to different factors. For example as Organic hampers is set at £40 less than their closest rivals it can easily see how many it would have to sell to break even if they were to raise the price. Although this may reduce their competitiveness, they would only have to sell 100 hampers at £100 each. This means the breakeven point has half. With this knowledge Organic hampers would be able to choose a competitive and realistic pricing strategy based on the ability to break even.
It seems that Costco and Sam’s Club are more similar with a strategy to have great products at the lowest prices, similar to most other companies in general. BJ’s offered those products at low prices but also tried to incorporate more products, some smaller sizes and a little more focus on the customer by giving them the convenience of aisle markers, self-checkouts, and express lanes. I feel that in terms of the bottom