COSTCO.ca is the Canadian
website of Costco Canada
|
 Costco
Wholesale Corporation (NASDAQ: COST)
is the largest membership warehouse club chain
in the world based on sales volume, headquartered in Issaquah, Washington,
United States, with its flagship warehouse in nearby Seattle.
Costco's Canadian operations are based
in Ottawa, Ontario. It is the fourth biggest general retailer in the
United States, after Wal-Mart, The Home Depot, and Kroger.
The main competitor in the membership
warehouse space is Sam's Club. Although Sam's Club has more
warehouses than Costco, Costco has higher total sales volume. Costco employs
about 132,000 full- and part-time employees, including seasonal workers, and
for fiscal year 2006, which ended on September 3, 2006, the company's store
sales totaled $60.2 billion of which $1.1 billion was net profit. Costco is
#32 on the Fortune 500.
Costco currently operates two other
retail formats, a home furnishings concept known as "Costco Home,"
and a strictly business operation known as "Costco Business Center."
There are currently two Costco Home
locations (Washington State & Arizona, both in former HomeBase
warehouse stores) with plans for a third on the west coast. Costco
membership is required, and hours of operation are identical to that
of regular Costco warehouses.
There are a handful of Business
Centers, all of which offer delivery via a private fleet of trucks.
Some locations have a retail selling floor open to Costco members
who wish to shop in person, while others are strictly delivery only.
Plans for Costco Fresh, a gourmet
supermarket, were abandoned in 2004. Over the years, Costco has
gradually expanded its range of products and services. Initially it
preferred to sell only boxed products that could be dispensed by
simply tearing the shrinkwrap off a pallet. It now sells many other
products that are more difficult to handle, such as
fresh produce, meat, dairy, seafood, fresh
baked goods, flowers, clothing, books, software, vacuums,
appliances, home electronics, jewelry, art, fine wine, hot tubs, and
furniture. Many stores have tire garages, pharmacies,
hearing aid centers, optometrists, photo processors, and gas
stations.
Costco focuses on selling products
at low prices, often at very high volume. These goods are usually
bulk-packaged and marketed primarily to large families and businesses.
Furthermore, Costco does not carry multiple brands or varieties where
the item is essentially the same except when it has a house brand to
sell, typically under the Kirkland label. This results in high volume of
sales from single vendor, allowing further reduction in price, and
reducing marketing costs. Costco also saves money by not stocking extra
bags or packing materials; to carry out their goods, customers must
bring their own bags or use the merchandise shipping boxes from the
company's outside vendors.
Currently membership fees at Costco are $50 per year for Goldstar and
Business Memberships, which can be upgraded to Executive membership for
an additional $50 per year. Along with the additional benefits the
executive membership has (e.g. car purchasing savings, home loans, car
insurance, check printing services) executive members also receive an
annual "2% Rewards Check" of up to $500.00 from Costco on all purchases
made (excluding select items such as gasoline, alcohol, and tobacco).
Costco is only open to members and their guests, except for purchases of
liquor and gasoline in some U.S. states due to state law; and
prescription drugs due to federal law. Memberships must be purchased in
advance for one year (as of May 5, 2007). Purchases made at Costco's
website do not require a membership; however, a 5% surcharge is added to
purchases made by non-members. Purchases made with Costco Cash Cards
also do not require a membership, and there is no surcharge. United
States Costco locations only accept American Express (not in the UK and
only Samsung credit cards in South Korea), PIN-based debit cards (Interac
in Canada), cash, and checks. Guests of members are not allowed to write
checks.
Lighting costs are reduced on sunny days, as most Costco locations have
several skylights. During the day, electronic light meters measure how
much light is coming in the skylights and turn off an appropriate
percentage of the interior lights. During a typical sunny day, it is
very common for the center section of the warehouse to have no interior
lights burning.
Most products are delivered to the store on shipping pallets, and the
pallets are used to display products for sale on the retail floor. This
contrasts with other retailers that break down pallets and stock
individual products on shelves. Costco caps its profit margin on most
products at 14% or 15%, but generally limits price markup on products
from 8%-10%.
|
