Costco, a discount warehouse based in San Diego California is a place where local small business members could obtain needed merchandise at economical low prices. It is operated as a membership retailer. Their business model helps them to achieve their mission to continually provide their members with quality goods and services at the lowest possible prices.
The pricing strategy was consistently below the traditional wholesale or retail outlets, focuses on the price sensitivity of its consumers. They keep prices on low exclusively to its members, resulting to high revenues. With this strategy, the patronage among the consumers/members was totally concentrated to them. Their merchandising strategy was to provide members with a selection of only 4,000 items, known for its treasure hunt merchandising. Though Sam’s Club also has about closely to 4,000 stocks but less upscale on treasure hunt strategy and on the other hand, BJ’s Wholesale offers a wide range of choices having 7,300 items, having said these, Costco is still on top on the merchandising industry that moment.
Costco value treasure hunt merchandising believing that buyers remained on the lookout to make one-time purchasesof items that would appeal to the company’s clientele and that would sell out quickly. Example of these treasure-hunt specials they offer are namely: espresso machines, expensive jewelry and diamond rings, Italian-made Hathaway shirts, Movado watches, exotic cheese, Coach bags, necklaces and among others.
Costco has been very successful in opening stores compares to its competitor. They opened 127 new warehouses in the year 2005-2008. Their warehouses ranged size is from 70,000 to 205,000 square feet; the average size was 141,000 square feet while on Sam’s Club ranges between 70,000 to 190,000 square feet with the average being about 132,000 square feet and on BJ’s wholesale however ranges to 71,000 square feet.
Considering the strategy pricing of Costco, based on the data provided in...