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Table of Contents
Executive Summary........................................................................................................................ 2
Recommendations........................................................................................................................... 4
International Expansion .............................................................................................................. 4
Self-Checkouts / Mobile Application ......................................................................................... 4
Overall Position .............................................................................................................................. 5
Opportunities............................................................................................................................... 5
Threats......................................................................................................................................... 5
Competitive Pressures Created by the Rivalry among Competing Sellers................................. 6
Competitor Pressures Associated with the Threat of New Entrants........................................... 7
Competitive Pressures from the Sellers of Substitute Offerings ................................................ 8
Competitive Pressures Stemming from Buyer Bargaining Power.............................................. 9
Competitive Pressures Stemming from Supplier Bargaining Power.......................................... 9
Driving Forces in the Macro-environment ................................................................................... 10
Improvements in Technology ................................................................................................... 10
Recession of 2008..................................................................................................................... 11
Key Success Factors ..................................................................................................................... 11
Low Operating Costs .................................................................................................................... 12
Merchandise Quality & Selection............................................................................................. 12
Location .................................................................................................................................... 13
Member Services ...................................................................................................................... 14
Costco Analysis ............................................................................................................................ 14
Is the strategy working?............................................................................................................ 14
Costco Strengths ....................................................................................................................... 15
Costco Weaknesses................................................................................................................... 16
Works Cited Page ......................................................................................................................... 17
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Executive Summary
The warehouse and wholesale industry is attractive at this time, even though the industry faces
some threats from rivals and substitute products there are many opportunities for expansion into
international markets. There is a high degree of competitive pressures created by the rivalry
among wholesale clubs, mainly because there are only three major competitors competing for
market share. The cost-based strategy employed by these clubs has resulted in low profit margins
and an intense battle for market share.
Wholesale clubs face a weak threat from new entrants because of the high barriers to entry
including economies of scale. Current wholesalers employ a membership strategy, with annual
fees that allows them to price their products just above cost, resulting in high member
satisfaction, and member retention.
Wholesale clubs face moderate pressure from discount supermarkets and other big box retailers,
such as electronic, department stores and online retailers which can provide alternative sources
of bulk bargains or low prices. Customers may choose not to shop at wholesale clubs because
other alternatives can offer a relatively low cost experience with a larger variety. Warehouse
clubs are forced to comply with the demands of their price sensitive members regarding lower
prices because of the fees they pay for membership.
Since the companies in this industry are very similar, consumers have the ability to command
low prices because they are able switch to another rival after their membership expires at a low
cost, without losing any major services that are offered. Wholesale clubs face moderate pressure
from suppliers even though they are able to utilize economies of scale.
The creation of the mobile internet on smartphones has made it easier for consumers to make
purchase during the economic recession. Self-checkouts enable businesses to reduce customer
checkout waiting times and payroll costs. Many retail businesses, such as Costco, have taken
advantage of the popularity of smart phones by creating applications for them that allow users to
make purchases or obtain information about the company.
Costco currently averages more than 100,000 members per store, which is more than 60% more
than Sam’s Club, which is its closest competitor. Within the wholesale club industry, there is an
importance placed upon low operating costs, the merchandise selection and quality, location, and
the amount of differentiated services offered. Low operating costs are crucial to success in the
wholesale club industry because it helps keep prices low, which are important to success because
consumers that shop at wholesale clubs tend to be price sensitive.
These warehouse clubs offer a narrower selection of merchandise by selling fewer brands and
mostly only larger sizes but still at a high quality which is important to these clubs success
because it gives their customers value. One way these companies offer extreme value is through
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a program called treasure hunt merchandising, which creates anticipation among their members
and brings them into the store more frequently.
An effective store placement strategy is important to success because it can reduce costs, and
increase revenues. Industry participants each offer a differentiated selection of services that
separates them in an industry where companies are very similar. Costco’s value based strategy
with a broad differentiation has helped them become the most profitable company among their
competitors.
Costco has attained a market leadership position, and are continuing to grow faster than both
Sam’s Club and BJs. Costco competes with its rivals using comparable profit margins at 1.55
percent to attract more customers by providing value to their purchases. The company has almost
20 percent more members than its competitors and yet they are operating 22 percent less stores
than their closest rival.
Costco’s strong brand recognition and wide geographic coverage has helped them attract
customers and drives sales. As of March 2010 Costco Wholesale ranked third largest retailer in
the United States and the eighth largest in the world. Implementing cross-docking depots,
maximizing freight volume, and eliminating multi step merchandise handling, enabled them to
sell inventory at very low prices.
CEO, Jim Sinegal who had a unique talent for discount retailing and a long career of field
experience was one of the company’s strongest competitive strengths. Finally the company’s
large market share and wide geographic coverage put them in a position of industry advantage.
Costco maintains a high percentage of current liabilities which is because they have an efficient
supply chain that gets the merchandise on their showroom floors in less than 24 hours.
Referencing the concept of continuous improvement one might consider Costco’s pricing and
profitable recession period to be shortcomings in a business.
The current recession has led to changes in buyer preferences, with unemployment above 9%,
consumers who had previously been spending carelessly have been very cautious. As the
economy slowly turns around from the 2008 recession, there is an underlying possibility that
Costco shoppers will move away from warehouse clubs because they are more confident in the
economy which leads them to be willing to spend more money or become less price sensitive.
Sam’s has an advantage in the industry because it is owned by Wal-Mart, and gives them more
buyer power and more efficient distribution systems.
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Recommendations
International Expansion
Costco should open operations in China and Brazil because over the past ten plus years these
countries have seen strong growth rates and have been heavily industrializing and incomes have been on
the rise and there are very high population densities in the major metropolitan areas. In 2010 the
company’s most profitable store was in Korea and its second most profitable store was in Taiwan. Both of
these countries have high population densities which is a huge factor for Costco’s success there because it
helps the supply chain of the region run more efficiently and provide a large pool of potential customers
to become members. The cities Costco should first open stores in these countries are Beijing, Shanghai,
Hong Kong Sao Paulo, Rio Di Janeiro because of their high population densities.
Costco should slowly move into Brazil and China by first opening a couple of test stores to make
sure they will be successful there. There are some political concerns around these two countries but they
are large global players in the economy and it should still be profitable for Costco to expand to Brazil and
China. Another advantage for Costco to expand into these countries is that Costco already has the
distribution centers somewhat close to each of those countries. Korea and Taiwan where Costco already
distributes is very close to China and Mexico and Puerto Rico is at least in the same region as Brazil.
Self-Checkouts / Mobile Application
Costco should invest money in self-checkout register as way to reduce costs while improving
customer service through reduced wait times. Investing in this technology would require a large initial
investment, but it would reduce the amount of employees needed. Warehouse stores rank the lowest of all
big box retailers in terms of customer service; the most common complaint is long checkout lines. This
would reduce that because you can have many of these registers, without any additional manpower except
for someone to monitor them. Implementing this strategy would be most effective if the changeover is
done gradually. This would also allow customers unfamiliar with the technology to learn them. They
should keep mostly traditional registers, especially at first, to give consumers the option. Some
consumers, especially the elderly are unwilling to use this technology, so this option would benefit them.
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Costco should do implement this on a store-by-store basis in order to see if their operating efficiency has
improved, and to get feedback from customers.
Costco should implement a smartphone application strategy that would serve as a mobile
checkout register while shopping within the store and it would allow them access to shop at the website,
away from the store. This is a less expensive way to implement the self-checkout register idea because
there is minimal investment in hardware. It would take advantage of a technology that consumers are
already comfortable with. To implement this, they would need to contact the appropriate people to create
the application, and they would need to invest in wireless technology for their stores as well as training
for their employees.
Overall Position
Opportunities
The greatest opportunity for these companies is through expansion into international markets.
Although both Costco and Sam’s Club have an international presence, there are many markets they can
capitalize on. The company who implements this type of expansion strategy could find it easier to gain a
firm grip on market share through brand loyalty.
Recent advances in technology have created an opportunity for this industry. One such
advancement is the creation of self-checkout registers. These registers benefit the company by reducing
payroll costs, and benefit the customer by decreasing their wait time at checkout. An additional
advancement in technology is the creation of smartphones application systems, which allow companies to
create applications that enable the consumer to obtain company information, as well as making purchases.
This added convenience for the consumer should result in increased revenues.
Threats
There are numerous threats that have the potential to compromise the future revenues of the companies
within this industry. These threats include an intense rivalry among the three main competitors that share
almost complete market share, a moderate chance that consumers will choose a substitute product over
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the ones sold in clubs, and a high amount of buyer power which puts these clubs at a disadvantage. Along
with this, these companies must currently compete for market share during an economic recession. The
current recession has made consumers more cautious when it comes to their spending habits, making
them less likely to spend on non-essential items.
The Five Competitive Forces that Shape Strategy
The warehouse and wholesale industry is attractive at this time, even though the industry faces
some threats from rivals and substitute products there are many opportunities for expansion into
international markets. The lack of presence in the majority of countries outside North America is a great
opportunity, in which the first to act could acquire brand loyalty and economies of scale in other markets
before competitors. There are however many threats to the firms in this industry, which make it
unattractive. These threats include an intense rivalry among the three main companies, a moderate chance
of consumer choosing firms offering substitute products over the ones sold in these clubs, and the high
amount of bargaining power puts these firms at a disadvantage.
Competitive Pressures Created by the Rivalry among Competing Sellers
There is a high degree of competitive pressures created by the rivalry among wholesale clubs,
mainly because there are only three major competitors competing for market share. The limited number
of firms competing has created an intense battle for customer business. Intensifying the rivalry between
Costco, Sam’s Club, and BJ’s is the cost-based strategy implemented by all three. Each company attempts
to attract customers by differentiating themselves from their competitors through the creation of private
label brands to increase the demand to shop at their stores, which has sparked a battle for location
supremacy.
The cost-based strategy employed by these clubs has resulted in low profit margins and an intense
battle for market share. With this strategy, these companies provide their customers with products of
equal quality to that of supermarkets and large box retailers, but at steep discounts. As part of this strategy
these companies have a minimal advertising budget. Some of the advertising they do includes newsletters
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to members, but in the case of BJ’s they put some money into radio and television. They also use
charitable donations in order to both advertise, and get a more socially responsible image Wholesale
clubs have agreements with manufacturers in place for the creation of their own private label brands,
which has led to increased differentiation but with mixed results. These brands are used to attract
members away from their competitors by offering a high quality product at an even better value when
compared to brand names. Member’s Mark of Sam’s Club, or Kirkland Signature brand of Costco are
some examples. Costco refuses to sell private label products at their stores unless they can sell them at a
deep discount from the brand name products that they sell. Their Kirkland Signature line has done very
well in the past and over the past four years they have expanded their product offerings from 400 to 600
products. On the contrary, BJ’s has reduced their private label offerings from 13% of their food and
general merchandise sales in 2007 to 10% in 2009. They kept only products with the highest margins or
biggest sales volumes.
Competitor Pressures Associated with the Threat of New Entrants
Wholesale clubs face a weak threat from new entrants because of the high barriers to entry
including economies of scale. New entrants would find themselves at a size disadvantage, and unable to
achieve economies of scale which would force them to charge higher prices to cover their costs. This
makes it very difficult for new companies to compete because low prices are important to success in this
industry. Economies of scale in this industry are somewhat unique because in a typical industry, the
largest company enjoys the largest cost advantages. Sam’s Club, which is the second largest company,
enjoys the largest cost advantage because they are backed by the purchasing power of their parent
company, Wal-Mart.
Current wholesalers employ a membership strategy, with annual fees that allows them to price
their products just above cost, resulting in high member satisfaction, and member retention. The low
profit margins create a strong barrier to entry because anyone that is trying to come into the market will
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not be able to undercut their prices and still operate at a profit. Companies intentionally have these
incredibly low profit margins because it makes it almost impossible for new companies to enter the
market. Costco offers memberships to individuals as well as businesses, for a reasonable price, and
because of this combined with low prices, makes customers feel as if they are getting an insider’s deal.
Costco members are highly satisfied and renew their memberships 87% of the time. This makes it
difficult for new entrants because most of the consumers will only have a membership at one of the
retailers because it costs them money to become a member and they mainly become members to enjoy all
of the money saving benefits. Potential new entrants would need to pry these members away from their
potential competitors which could be expensive and time consuming.
Competitive Pressures from the Sellers of Substitute Offerings
Wholesale clubs face moderate pressure from discount supermarkets and other big box retailers,
such as electronic, department stores and online retailers which can provide alternative sources of bulk
bargains or low prices. It must be considered that consumers aren’t looking to purchase in large quantities
all of the time, which increases the chance of losing business. This is especially true when it comes to
perishable grocery items, where people might prefer to go to a supermarket. If a customer wants to
purchase bread at BJ’s, they might have to purchase more bread then they can use before it expires and
becomes stale. Customers in this case are more willing to purchase a loaf or two at larger per unit cost,
because it ends up costing less because they will not be paying for more than they end up using. Even if
an item will never expire a customer might not choose to purchase the item in bulk even though the unit
cost is lower because they do not feel like they use it enough or they don’t want it to take up too much
room in their cabinets. A good example of this would be aspirin.
Customers may choose not to shop at wholesale clubs because other alternatives can offer a
relatively low cost experience with a larger variety. Although the size of wholesale clubs is much larger
than other retailers they carry much less product. Big box retailers typically carry between 125,000-
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150,000 products while Sam’s Club or Costco carry a mere 4,000. These supercenters have the same
product offerings, but many items are available with a much larger selection. Televisions for examples are
sold by both types of stores, but consumers may prefer to go to a store such as best buy where the quality,
selection, options, and staff expertise is better suited to fit their needs. If consumers need help with a large
purchase, they may go to a store where they can get specialized help because Costco has a limited number
of employees on the sales floor.
Competitive Pressures Stemming from Buyer Bargaining Power
Warehouse clubs are forced to comply with the demands of their price sensitive members
regarding lower prices because of the fees they pay for membership. Since prices and success in the
industry are directly related, companies operate at low profit margins which become attractive to
members in the form of low prices. Both Costco and BJs had a profit margin of less than 1.8% in each of
the past two years. Prices are so low the majority of the profit they make is from membership fees.
Since the companies in this industry are very similar, consumers have the ability to command low
prices because they are able switch to another rival after their membership expires at a low cost, without
losing any major services that are offered. Each club offers very similar selection of products and services
including food, clothing, electronics, and gas stations. Most have a vision center, fast food options, and
cell phone providers located inside the store. One service however that could be important especially to
the elderly is BJs lack of a pharmacy. The three major companies have many locations in the same areas
which include large metropolitan areas, suburbs, and high traffic routes.
Competitive Pressures Stemming from Supplier Bargaining Power
Wholesale clubs face moderate pressure from suppliers even though they are able to utilize
economies of scale. The level of economies of scale these companies have is restricted by the supplier’s
limited reliance on them because of the massive amount of retailers they sell to. The strategy used by
wholesalers gives them an advantage which reduces the power of manufacturers. Since these companies
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are not looking to carry every brand or every product and want to sell at low prices, they are not under
pressure to pay too high of a price in order to get all the contracts.
Trends in the Macro-environment
The creation of the mobile internet on smartphones has made it easier for consumers to make
purchase during the economic recession. With advancements in technology companies can save on
employee payroll by adding self-checkout registers. These also benefit the customers by decreasing their
waiting time in line. Companies are also creating apps for their consumer’s smartphones and tablets to
make it more convenient for them to shop and obtain information about their company. The results
companies are hoping for with these conveniences are threatened by the current economic recession. In
the current recession, consumers are becoming less likely to spend on non-necessities, which are the
majority of the items sold online and through these applications. Wholesale clubs are fortunate enough to
sell a lot of necessities as well, which has allowed them to perform better than most during these times
than many other industries.
Improvements in Technology
Self-checkouts enable businesses to reduce customer checkout waiting times and payroll costs.
Shoppers are most commonly dissatisfied from the amount of time spent in checkout lines, while payroll
costs are a concern for most companies. Self-checkout registers solve both of these issues because
companies can reduce wait times by placing more registers in store while decreasing payroll costs since
fewer cashiers will be needed. The ease and efficiency that comes with these registers should result in
more customers, which in turn will make the companies that choose to implement them, more profitable.
Companies are sure to invest in this technology to not only improve their customer’s experience but also
to remain competitive and gain market share.
Many retail businesses, such as Costco, have taken advantage of the popularity of smart phones
by creating applications for them that allow users to make purchases or obtain information about the
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company. These applications are a convenient alternative for busy consumers, such as small business
owners who are always on the go, to make purchases. This is a great competitive move for companies
looking to increase their online sales. Since convenience is important for success in retail, companies that
invest in this technology should have an advantage over their competitors.
Recession of 2008
The current recession has led to changes in buyer preferences, with unemployment above 9%,
consumers who had previously been spending carelessly have been very cautious. This change also
affected the underemployed and people with full time jobs because the unemployment rate kept rising and
there were widespread fears of future layoffs. Discount retailers saw an increase in business during this
time, including the wholesale industry. Companies such as Costco were able to see a slight increase in
sales due to their value or cost-based strategy. Sales were still affected however, because revenue from
non-essential products such as electronics saw a decrease.
Rivalry Analysis
Market Position of Rivals
Costco currently averages more than 100,000 members per store, which is more than 60% more
than Sam’s Club, which is its closest competitor. In 2010 they had the largest international presence with
153 stores. There 2 most profitable stores were in the Taiwanese and Korean markets. With the largest
market share of over 50%, and strong financials and growth prospects, Costco is planning further
expansion into the Taiwanese market which includes a new distribution center that will make it easier to
expand further in the future.
Sam’s Club has the most stores with about 730 but averages less customers per store compared to
Costco. They also have a large international presence with more than 133 stores. Sam’s club enjoys the
most bargaining power out of the three companies, along with very efficient distribution channels. Since
they are owned by Wal-Mart and have access to their distribution centers, they are backed by Wal-Mart’s
purchasing power. Since Wal-Mart Supercenters carry many of the same items that wholesale clubs carry,
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they purchase through the same suppliers. This puts pressure on suppliers to give discounts to Sam’s
Club, because otherwise they would risk losing Wal-Mart as a customer which could be devastating to
their operations.
BJ’s which the latest major competitor to join the industry has a much smaller member base and
market presence. The lack an international presence and are located almost exclusively on the east coast
of the United States. There are current plans to open more stores in the existing market but no plans to
expand into new markets.
Key Success Factors
Within the wholesale club industry, there is an importance placed upon low operating costs, the
merchandise selection and quality, location, and the amount of differentiated services offered. These four
factors have a significant contribution to the success of these firms because they all play a role in
attracting customers from their competitors, and because they are catering to a price sensitive, bargain
hunting member base.
Low Operating Costs
Low operating costs are crucial to success in the wholesale club industry because it helps keep
prices low, which are important to success because consumers that shop at wholesale clubs tend to be
price sensitive. The majority of the members that belong to these clubs are on a budget, so they tend to be
bargain hunters. Examples of members include small business owners, churches, and large families.
Unlike traditional big box retailers, wholesale clubs are set up to look like warehouses. When the
company buys inventory it is shipped to the warehouse floor within 24 hours. This helps keep their costs
low because they are able to keep extra inventory on hand instead of in separate warehouses, and thus
reduces overhead. It also reduces shipping costs because the product is already in their possession.
Merchandise Quality & Selection
These warehouse clubs offer a narrower selection of merchandise by selling fewer brands and
mostly only larger sizes but still at a high quality which is important to these clubs success because it
gives their customers value. The quality and selection of the merchandise that is offered is what makes the
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low prices attractive. This is due to the majority of the products sold are offer in bulk. The narrow
selection consists of stocking fewer items and sizes in order to save costs in purchasing, shipping, and in-
store handling of merchandise. Since the vast majority of products sold by each company are practically
identical, the creation of private label brands is important to success. A quality, private label product at
low cost gives consumers a reason to prefer shopping at one club over another.
One way these companies offer extreme value is through a program called treasure hunt
merchandising, which creates anticipation among their members and brings them into the store more
frequently. The program entails selling high end products at large discounts to ensure a quick turnover.
This not only creates more value for the member but also increases revenues because when members
come to look at the treasure hunt merchandise they are more apt to purchase other products.
Location
An effective store placement strategy is important to success because it can reduce costs, and
increase revenues. Wholesale clubs are typically placed in upscale suburban areas along high traffic areas.
This allows clubs to take advantage of affordable startup costs by staying away from the prime real estate
options of large metropolis areas. It also allows clubs to reach consumers in an area where the median
income levels are high.
An effective store placement strategy on a broader level allows companies to capture market
share away from competitors. Companies in this industry typically “attack” their rivals by placing stores
nearby their stores. A good example of this is Costco’s placement of a lot of their clubs within 10 miles of
BJ’s clubs in order to attract their member base. Companies are also capturing market share by expansion
into new markets, especially international. Like other industries, being the first to expand in a new market
encourages success because it allows you to acquire brand loyalty before competitors arrive. Increasing
the number of stores also helps to advertise the company because of the number of people that live in the
area or that drives by the store fronts.
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Member Services
Industry participants each offer a differentiated selection of services that separates them in an
industry where companies are very similar. These services have a substantial impact on a firm’s success
because they bring in more members, and thus more revenues. It is in line with the value based strategy
these companies provide because the more quality services members receive they feel they are getting
more for the money they spend on membership fees. Companies offer different types of memberships
catered to their members needs whether it be for a business or household. In addition to this, they offer
many services such as insurance, loans, and travel programs. These companies each offer unique services,
which will attract customers away from their competitors who do not offer these services.
Costco Analysis
Is the strategy working?
Costco’s value based strategy with a broad differentiation has helped them become the most
profitable company among their competitors. They have attained a market leadership position, and are
continuing to grow faster than both Sam’s Club and BJs.
Costco competes with its rivals using comparable profit margins at 1.55 percent to attract more
customers by providing value to their purchases. Their competitively low profit margin also reduces the
threat of new entrants allowing them to focus more on separating themselves from existing competition.
The company has almost 20 percent more members than its competitors and yet they are
operating 22 percent less stores than their closest rival. With membership renewal rate at an attractive 87
percent, Costco is able to hold on to current customers while increasing new memberships faster than
Sam’s Club and BJs.
Their strong brand recognition and wide geographic coverage has helped them attract customers
and drives sales. The company operates 567 warehouses, which span throughout the United States and
reach internationally. They also bring in the highest total revenues at $71,422 million. If Costco’s market
growth continues at its current rate they will potentially build a gap between their rivals.
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Costco Strengths
As of March 2010 Costco Wholesale ranked third largest retailer in the United States and the
eighth largest in the world. The company’s great success has flourished because of numerous competitive
strengths: specialized skills, valuable assets, and their dominating market presence.
Implementing cross-docking depots, maximizing freight volume, and eliminating multi step
merchandise handling, enabled them to sell inventory at very low prices. In return they attracted large
quantities of customers, purchasing in bulk, producing high income and quick turnover. This strategic
skill of minimizing operating expenses played out as one of the main factors for their attractive
profitability.
CEO, Jim Sinegal who had a unique talent for discount retailing and a long career of field
experience was one of the company’s strongest competitive strengths. His superb business intelligence
has created advantages between Costco and competitors, such as giant pricing gaps. Working towards a
long-term vision of continued growth Sinegal made sure all store were operating under the same direction
and the most up to date information.
Finally the company’s large market share and wide geographic coverage put them in a position of
industry advantage. The company operated 527 warehouses at the end of 2010 and competed with rivals
such as BJs, by establishing themselves within a mile of almost all BJs locations. Placing a Costco in
forty of the fifty states and having above average international operations allowed them to dominate the
market.
Costco maintains a high percentage of current liabilities which is because they have an efficient
supply chain that gets the merchandise on their showroom floors in less than 24 hours. The supply chain
coupled with their low price strategy creates a high inventory turnover. These are the main reasons that
the current liabilities are low. This helps Costco to borrow less money because they have the revolving
door of debt from these suppliers because they are selling the goods faster than they have to pay the
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manufacturers back for the merchandise. Costco has a low profit margin that has been going down since
2000. Costco ROA has also been gradually going down since the year 2000. Both of these provide
evidence that Costco is sticking to its best value strategy that has been effective.
Costco Weaknesses
Referencing the concept of continuous improvement one might consider Costco’s pricing and
profitable recession period to be shortcomings in a business. Markups and prices were so minimal in
regards to covering expenses that shareholder profits were lowered as an outcome. If it were not for
membership fees Costco’s profits would be unstable due to its strategy of capping the margins on goods
at 14.5 percent. Costco’s prices were not as elastic as they might think and their shareholders might
benefit from a slight increase in their pricing.
As the economy slowly turns around from the 2008 recession, there is an underlying possibility
that Costco shoppers will move away from warehouse clubs because they are more confident in the
economy which leads them to be willing to spend more money or become less price sensitive. The
company was able to survive the recession because of its affordable prices, but with higher income comes
a higher standard of living. So if society does turn away from wholesale then Costco’s 70 percent of
operating profits dependent on memberships will be a dramatic problem.
Sam’s has an advantage in the industry because it is owned by Wal-Mart, and gives them more
buyer power and more efficient distribution systems. Gives them more brand recognition because Wal-
Mart is the largest company in the world, helps them enter new markets because there is a good chance
that Wal-Mart is already there.
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Works Cited Page
"Costco.com." Costco.com. Costco Wholesale Corporation, 1998. Web. 04 May 2012.
<http://www.costco.com/>.
"US Inflation Calculator." Current Inflation Rates. COINNEWS MEDIA GROUP LLC, 2008. Web. 04
May 2012. <http://www.usinflationcalculator.com/inflation/current-inflation-rates/>.
