PHILIPPINE MICE

CAN COSTCO’S ANTI-WAL-MART APPROACH SUCCEED IN THE LONG RUN?

Mikhail Camacho
Franz Dionisio
Mica Soriano

I. Overview The article talks about Costco CEO Jim Sinegal’s strategy in attracting and keeping its shopper base. The article also highlights Costco’s employee wages and compensations which are relative higher than their competition. The article also showed Costco’s overall retail strategy which has been key to their “anti-Wal-mart” image.

II. Situation Analysis

Internal

Strengths
S1 – Leading membership club chain in the US with 50% market share
S2 – High annual sales
S3 – High salaries and good benefits for employees/great price deals for customers
S4 – Low employee turnover rate and theft incidents
S5 – Low goods markup/great values
S6 – Overall retail strategy
Low costs on building and fixture
Low inventory
Promos for shoppers
S7 – Limited suppliers allowing for quantity discounts
S8 – Maximizing inventory turnout
S9 – Strict stand of Jim Sinegal

Weakness
W1 – Over-generosity to workers leads to higher costs
W2 – Low goods markup
W3 – Less attractive store interiors
W4 – Less items on stock
W5 – Tough stance of Jim Sinegal in negotiating
W6 – Varying items and no return/exchange policy
W7 – Items are subject to availability

External

Opportunities
O1 – Upper middle-class to upper class shoppers
O2 – Consistent market growth
O3 – Bargain/special buy hunters
O4 – Favorable turnover rate for suppliers
O5 – Affluent customers looking for bargain high-end products
O6 – Maximized brand equity due to lean stock
O7 – Affluent shopper base looking for convenience shopping
O8 – Positive image due to fair treatment of employees
O9 – Cheaper priced quality products for price conscious consumers
O10 – Warehouse club scheme builds rapport with customers

Threats
T1 – Restricts other customers who cannot afford the membership
T2 – Competitors may have higher sales revenues due to higher markups
T3 – New