Case 4: Competition Among the North American Warehouse Clubs: Costco Wholesale Versus Sam’s Club Versus Bj’s Wholesale

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Case 4: Competition among the North American Warehouse Clubs: Costco Wholesale versus Sam’s club versus BJ’s Wholesale Jriya Palanachsuk

Southern New Hampshire University
July8, 2012

Competition among the North American Warehouse Clubs: Costco Wholesale versus Sam’s club versus BJ’s Wholesale Case Summary
According to the case, in the year 2010, the nearly $ 125 billion discount warehouse and wholesale club segment of the North American retailing industry concluded of the tree major competitors, which are Costco wholesale, Sam’s Club (both of them belongs to Walmart) and BJ’s Wholesale Club. The three warehouse clubs operated no- frills, self service big box facilities where customers could choose from relatively narrow assortment of discount – priced merchandise across a wide range of product categories. The example products are food, household supplies, electronics, office supplies, books, clothes, DVDs, and so on (Arthur A, T 2010).

The strategy of these retail stores is that the stores offer discounted or low prices to the customer. This strategy has helped the company attract customers’ attention. As we know people are looking for a good product and low price always. The way that these stores do in order to reduce its cost are as the following; Costco, Sam’s Club and BJ’s Wholesale can get the lower operating costs than another retailer stores because they buy full truckloads of merchandise directly from producers, they showed item on inexpensive shelving, they tried to keep extra inventory in high shelving, the most important thing is that they had very low labor cost if compared with the other competitors. The reason is that the warehouse not opens long hours than the other retailer store does so that there are a few numbers of people working there). Moreover, Costco, Sam’s Club and BJ’s wholesale do not focus much on IMC ( Integrate marketing channel ) In this case, it talks about investing in advertising and

customer service. Thus, those ways have helped the three stores maintain lower operating cost, and it could be the competitive advantage of the stores.
To talk about current market situation, there were more than 1,250 warehouse clubs locate in USA, Canada and Mexico. Costco is the leader of market, which contained 56 % (the highest percentage of market share in industry) followed by Sam’s Club that had a 36 percent share and BJ’s wholesale and others had an 8 percentage of market share. Namely, there are many strong major competitors such as Walmart, Dollar general, Target, Kohl, Best Buy and so on. Those competitors also offer the customers low price everyday. Analysis

Regarding to the case, Costco, Sam’s club and BJ’s wholesale offer quality, brand name merchandise at substantially lower prices than are typically found at conventional wholesale or retail sources (Investor relation, 2010) (Investor,2012). Additionally, these three wholesaler have helped either small or medium sized businesses to reduce its costs in purchasing for resale and for everyday business use. Beside the small and medium sized are main customers, there is large number of individuals purchasing also. For example, personal needs. From the case, the similar strategy of the three wholesaler is that providing their customers or members with quality goods and services at the economic friendly prices and they also have difference in their strategy as well which is Costco is offering item in large amount at low prices while Sam’s club is getting the low cost product form China and Mexico which can help them reduce its product cost. BJ’s is more grocers’ store if compared with Sam’s club and Costco, and BJ’s prefer to sell their product as smaller quantities of package. If compare with all three of them, BJ’s is poor of brand awareness, and Costco do the best job in order to be the market leader that can obtain the cost efficient distribution. They sell the product in large amount (bulk) at friendly price. This strategy...
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