Despite these challenges, people always need groceries and Costco is ready to deliver the goods -- literally -- and these issues are discussed further below.
Although Costco enjoys a healthy share of its market, the company has not been immune from the Great Recession of 2008 as reflected in its historic stock performance shown in Figure 2 below.
Figure 2. Costco Stock Performance: July 2003 to Date
Despite this temporary downturn, the company has regained its momentum and has exceeded its pre-Great Recession performance levels. As noted above, though, while Costco is continuing to grow, the 800-pound corporate gorilla in the department/specialty retail store sector is still Walmart, with the company trailing at a distant second followed closely by Target Corporation as shown in Table 1 and illustrated graphically in Figure 2 below.
Costco Competitors -- Respective Market Caps: Department/Specialty Retail Stores
Dollar General Corporation
Source: Costco Wholesale Corporation (COST) Competitors, 2012
Figure 2. Costco Competitors -- Respective Market Caps: Department/Specialty Retail Stores
Source: Based on tabular data in Costco Wholesale Corporation (COST) Competitors, 2012
A recent analysis by Zack's Equity Research concerning the company's recent performance indicates that Costco ended 2011 well situated to continue its pattern of growth into the foreseeable future. According to these market analysts, "Costco has battled through a tough economy and exited 2011 boldly. The U.S. economy has been reeling under the ongoing financial crisis,...
Amid this turbulent environment, Costco has almost been able to overcome the hurdles keeping an upbeat note, and we believe it to continue with its momentum in 2012" (Costco exists 2012 with strength, 2012, para. 4).
Given the enormity of its operations, the highly personal nature of the commercial transactions that are involved, and the numerous countries in which it competes, it is not surprising that Costco is having some profound social influences. For instance, according to Smith (2006), "Truly gigantic 'hypermarkets' including U.S.-based Costco built in suburban areas are reshaping both market structure and consumer practices" (p. 188). Likewise, the company is also reshaping the human resources approach used by membership warehouse clubs to its advantage. In this regard, Starr (2008) emphasizes that, "Costco, by virtue of their better workplace practices, can gain market share at Wal-Mart's expense" (p. 52). The company will only be able to gain a competitive advantage in this area, though, if it is able to leverage its existing technological capabilities to achieve its organizational goals and these issues are discussed further below
The company reports that it is faced with growing competition from competitors that offer online ordering and home delivery services (Form 10-Q, 2011). In this regard, the company's quarterly report cautions that Costco is faced with competition "which is vigorous and widespread, including a wide range of global, national and regional wholesalers and retailers, including . . . internet-based retailers" (p. 21). Despite these challenges, the company also maintains a prominent Web presence at http://www.costco.com / where it markets its entire range of consumer products, including grocery and floral items.
Issues and Recommendations
Key Strategic Issue. Based on the industry analysis and competitive advantage analysis of Costco,
Business Model The company is Costco. Costco Wholesale Connections is the largest membership warehouse club chain in the United States. A warehouse club chain is a retail store that sells a wide variety of merchandise where clients are required to buy products in quantities, reducing its price markup on products up to 15%. The cheap prices, kept down by the no-frills atmosphere to the store makes the store attractive to people
Sugar value chain MORE LABELS Sugar: it gives us energy, in more ways than one. But this comes at a huge cost that is becoming more recognized, which will eventually have to be tallied up as population growth and resource depletion force humankind to re-evaluate consumption patterns all over the globe. The environmental consequences of sugar production have been apparent for centuries but are growing more urgent as production expands, releasing