Transcript Costco.ppt
Costco Sarah Casavan Kati McCoy Janelle Powell Overview As of Sept. 2006: Operated 458 Warehouse clubs 358 in the US (37 states and Puerto Rico) 68 in Canada 18 in UK (15 in England, 3 in Scotland) 5 in Korea 4 in Taiwan 5 in Japan Mission Statement To continually provide members with quality goods and services at the lowest possible prices. In order to achieve mission they conduct business with the following Code of Ethics in mind Code of Ethics 1. 2. 3. 4. 5. Obey the law. Take care of members. Take care of employees. Respect suppliers. Reward shareholders. Business Plan offer members very low prices on a limited selection of nationally branded and selected private label products in a wide range of merchandise categories will produce high sales volumes and rapid inventory turnover Enables them to operate profitably at significantly lower gross margins than traditional wholesalers, mass merchandisers, supermarkets and supercenters. Warehouses typical warehouse 140,000 square feet Floor plans are designed for economy and efficiency in the use of selling space, the handling of merchandise and the control of inventory. By strictly controlling the entrances and exits of warehouses and using a membership format, they have limited inventory losses to less than twotenths of one percent of net sales in each of the last three fiscal years well below those of typical discount retail operations. Warehouses Carry an average of 4,000 SKUs as opposed to typical discount retailers and supermarkets that usually carry 40,000 to 60,000 SKUs Only provide products that they can provide at a deep discount Advertising Limit marketing and promotional activities to new warehouse openings, occasional direct mail marketing to prospective new members and direct marketing programs (such as the Costco Connection) to existing members promoting selected merchandise. Create much lower advertising costs compared to most retailers Membership designed to reinforce customer loyalty and provide a continuing source of membership fee revenue, which allows them to offer low prices. Members can utilize their memberships at any Costco warehouse location. have two primary types of members: Business, and Gold Star (indiv.) Can also upgrade to an Executive membership Businesses, including individuals with a business license, retail sales license or other evidence of business existence, may become Business members. Executive memberships are more expensive ($100 annually instead of $50), but offer additional savings Energy Management Conservation To keep prices low, they try to keep costs low Energy is a significant cost, so they already try to conserve as much as possible As new technology is developed, Costco continues to look for new ways to improve Benefits customers as well as communities Utilize sky-lights to decrease light usage Constantly watch for new technology offering greater light at lower cost Use minimal lighting (compared to others) Conservation Installed solar panels in one of their California Warehouses Has been successful in lowering lighting and cooling usages and costs Plan in install in additional warehouses Training drivers in “fuel-efficient methods” Using Hybrid trucks – scheduled for testing in Spring 2007 twelve years ago at corporate office with eighteen vans. Today, we have fifty-two vans (vans, fuel, maintenance and insurance provided by four transit agencies), Reducing Fuel Consumption Encourage employees to carpool wherever practical Commute Trip Reduction (CTR) program Offer employees subsidies to vanpool and employees who purchase monthly bus passes. SWOT Analysis - Strengths Offer items at a deep discount Lower advertising costs Many locations Food Samples – make shopping enjoyable Food Vendors – don’t have to leave for lunch/dinner – shoppers stay longer Hot dogs, pizza, churros, ice cream, chicken bake, etc. Conservation efforts Return Policy No receipt, no questions asked SWOT - Weaknesses Membership only Membership prices No advertising Most have bad parking Warehouse layout High Turnover Only offering products in bulk SWOT - Opportunities Expansion (into other states) Advertising Continued Conservation Efforts SWOT - Threats WinCo Sam’s Club Other retailers in respective markets (Wal-Mart, Target, Lowe’s, Home Depot, etc.) Sources http://media.corporateir.net/media_files/irol/83/83830/repor ts/70072002.pdf http://media.corporateir.net/media_files/NSD/cost/reports/o ur_mission.pdf