Case Study: Costco Wholesale vs. Sam's Club vs. BJ's Wholesale |
Management 4001 |
Danielle Lewis |
Costco Wholesale vs. Sam's Club vs. BJ's Wholesale
The main strategic issue that is faced by Costco (and by Sam's Club to a lesser extent) is the fact that it has trouble competing with BJ's Wholesale on some key factors of customer service. Costco is a warehouse-style retailer, just like the other two companies. Typically, these companies offer lower prices, but consumers who shop there also need to buy their items in bulk (Thompson, 2011). They get fewer perks, such as fixtures and décor, but that saves them money in the long run. It is a very "no ...view middle of the document...
Recently, Costco was addressing the possibility of providing some services to customers by partnering with other companies. This could be one of the ways in which Costco can move forward and remain relevant as a warehouse-style retailer.
When companies, such as Costco, create a strategy and it proves to be very effective in the marketplace, that strategy is soon adopted by other companies. Then, those other companies take that strategy and see how they can improve upon it and make it even better (Barrett, 2003; Drucker, 2004). If the first company does not keep up with the changes that competitors are making, the company could find that it is getting pushed from the market (Gomez-Mejia, Balkin, & Cardy, 2008; Kleiman, 2010). Costco is not currently having this problem, but there are difficulties in the future it if they do not focus on giving more than warehouse-style buying to its customers. Currently, customers can get the same experience at Sam's Club or BJ's Wholesale, but they can also get significantly more from BJ's, because they have started offering the kinds of perks that retailers have while keeping the low prices and bulk buying that it had in the past.
Adding things like express lanes and self-checkout lanes may not seem like much, but to people who are in a hurry and want to have a pleasant shopping experience, those options can make a big difference (Thompson, 2011). Sam's Club has some market advantage because of its affiliation with Wal-Mart. BJ's Wholesale has the express lanes and other perks for customers who are in a hurry. What does Costco have? Costco still has the same things it had before - but its competitors are moving on and providing other perks and benefits for their customers (Thompson, 2011). That is going to become a big problem for Costco from a financial perspective and the perspective of customer satisfaction. Because that is the case, Costco must begin to reconsider its strategy and start making changes sooner, rather than later. If it does that, there is a good chance it can still remain very competitive with the other stores in the future.
Costco may be wondering what it should do. It could try to imitate what others are doing, but that does not always work for a company's advantage. Unless Costco can provide what other companies like it already have plus something more, there is little benefit to copying other stores. In short, Costco must catch up to what its competitors are doing, but then must move ahead by providing something that the other stores do not offer. This could be lower prices, a fancier store, more checkout lanes or personnel to help with purchases, or even something that is not related specifically to the store but that would be a benefit of membership. A sustainable strategy is one that can be used for an extended period of time to affect change in a positive direction (Thompson, 2011). Any company can create a sustainable strategy, but these kinds of changes need to be made...