Who Is Costco's Competitors

Part A:

Company & Corporate Partners Costco Wholesale Corporation, previously known as Price Club, is a membership warehouse operator. Price Club was incorporated in California in 1976 and initially only served small businesses. The company later realized the value in opening up their services to non-business owners which led to huge growth in the warehouse industry. The first Costco warehouse was opened in 1983 in Seattle and the company began selling is private label brand, Kirkland Signature, in 1992. In 1993 Price Club and Costco merged to create PriceCostco, later renamed Costco Wholesale Corporation. Today there are 741 Costco locations in 11 different countries. Unlike Sam’s Club, one of Costco’s biggest competitors which is owned by

The warehouse format works very well for the company and it has thrived in that sector with market share over both Sam’s Club and Bj’s. However, as Americans shop more online, Costco could be left behind if they simply stay the course. Food particularly is the newest product that you can have delivered straight to your door and it’s becoming increasingly popular thanks to other online competitors. This online growth is accompanied by a slowdown of growth in tradition in-person sales not only for Costco but for many retailers with online sale growth often doubling that of the stores. Unfortunately, every major retailer at this point has a website and many of them have a pick-up in store option. Costco lacks both and has no intention of adding either with Chief Financial Officer Richard Galanti stating he does not want to sacrifice valuable space in the warehouses to accommodate these options. As before, Amazon is the online retail juggernaut and is growing at a rate that should keep Costco wary. With the acquisition of Whole Foods and Amazon Fresh, the online retailer is more poised than ever to compete with wholesalers that sell food and produce. Unfortunately for Costco, carrying a varied selection of goods opens them up to competition from every angle. The main direct competitor in the online sector is Amazon and Walmart/Sam’s Club. Beyond that, any online retailer selling food, clothes,

The market is characterized by its high level of concentration, high level of competition, high barrier of entry, and almost minuscule level of government intervention. These traits of the industry created a bloody battlefield amongst only a handful of giant companies. The most notable players are Walmart, Costco, Meijer, Target, and BJ’s Wholesale Club holding market shares of 71.7%, 18.8%, 3.6%, 3.1%, and 2.6% respectfully. As the largest player in the industry, Walmart is the most important competitor of Costco. Currently Walmart operates 660 Sam’s Club locations and 3,522 Walmart US super-centers. Walmart’s industry relevant segments are Sam’s Club and the super-center segment in Walmart US. In 2017, the projected revenue of the relevant divisions will be 327.6 billion dollars. The high revenue is the result of a trend of steady annual revenue growth rate at the average of 2.2% over the past 5 years. Most of the growth can be attributed to the 3.1% annual revenue growth of the Walmart super-center segment, while the Sam’s Club is only growing at a much lower 1.3% rate. However, the growth in revenue didn’t translate to growing profit. Due to the increase in wages and drop in oil price, Walmart is suffering from a trend of consistent decrease in profits. Most notably in 2015, the profit of Walmart had dropped by