Daniel Bernards Austin Hutcheson Nicole Stefanek

CompanyCompany Overview  Costco operates an international chain of membership warehouses, mainly under the “Costco Warehouse” brand name  Headquarters are located in Issaquah, Washington and employs about 142,000 people nationwide  Provides a limited selection of nationally branded and private-label products across a wide range of merchandise categories at lower prices than competitors  Known for their bulk merchandise

Company Overview  Recorded revenues of $72,483 million in the financial year ending in August 2008  Net profit was $1,282.7 million in the same financial period  Size of stores range from 70,000 to 205,000 square feet  Carries an average of about 4,000 active SKU’s per warehouse, compared to competitors averaging about 40,000 to 140,000 SKU’s

Primary Merchandise Offerings  Broad categories include: Sundries, hardlines, food, softlines, fresh foodshardlines  Besides branded products, Costco offers a range of private label products under the brand name Kirkland Signature Various categories: juice, cookies, coffee, tires, housewares, luggage, appliances, clothing, detergent

Other Retail Formats  “Costco Home” Offers home furnishings and décor products including window treatments, carpeting, and cabinetry Locations: Washington, Arizona  “Costco Business Center” Customized products for food service, convenience stores and offices Office supplies, furniture, machines and break room supplies, convenience store supplies and resale items, espresso shop/stand supplies, restaurant supplies, equipment, and ingredients

Strengths  Strong market position 5 th largest retailer in the US and 8 th largest in the world Ranked 29 th in the Fortune 500 list of America’s largest corporations based on sales  Rapid inventory turnover rate High inventory rate reduces cost and shrinkage In 2008, inventory turnover rate was 12.8, compared to its competitors: ○ BJ’s Wholesale Club 9.4 ○ Wal-Mart 8.3 ○ PriceSmart 8.9  Low Marketing Costs

Weaknesses  Concentrated presence in California 27% of net sales in 2008  Lax quality control Purchases from foreign and domestic vendors gives them limited control over the quality of the products

Opportunities  Growth in online retailing Retail spending in U.S. was $128 billion in 2007, and is expected to reach $215 billion by 2012  Shifting of consumer demand towards private label products The purchase of high priced items has shifted to affordable private label products

Threats  Impact of intense competition Wal-Mart’s Sam’s Club, BJ’s Wholesale Club, and Target  Consumer confidence Economic slowdown in the global economy Affects the discretionary consumer spending as consumer gets cautious about job security and debt level

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