Costco Case Study Summary
Key Problems c-39
The key problems for Costco involve the current global financial conditions, demographics, the ability to keep market share in North America and the ability to find ongoing and reliable sources of merchandise.
The current economy is showing substantial declines in consumer durable spending as people defer such purchases as furniture and large appliances. In addition, according to the MasterCard financial report for May 2010, purchases of apparel have declined 6% for women and 10% for men with marginal increases for children’s apparel. The product categories for these two types of products encompass 29% of Costco’s business. Even though Costco is showing only a 3% decline this month over the same month in 2009, it is a worrying trend. They are, however, making up ground in products that tend to be more recession proof such as fine wines, snack foods and tobacco.
Demographics are troubling for Costco’s business model of large volume single size packaging of goods in order to minimize handling and restocking. With an aging population, more single and divorced people and smaller sized families, there are fewer and fewer people who need or want the huge sizes that are offered by Costco. I found it a wonderful boon when I was feeding a …show more content…
In fact, if we consider the data on page c-39 of the case study, it is evident that with less than 10% of the population of the United States, Canadian Costco stores are generating over one sixth of the revenue in comparison with the US with only 75 stores. Canada provides a stable environment with low levels of risk for the company in comparison with other nations. This would increase volumes for manufacturers as well. In many ways it forms and extension of the American market with many similar laws and identical
The key problems for Costco involve the current global financial conditions, demographics, the ability to keep market share in North America and the ability to find ongoing and reliable sources of merchandise.
The current economy is showing substantial declines in consumer durable spending as people defer such purchases as furniture and large appliances. In addition, according to the MasterCard financial report for May 2010, purchases of apparel have declined 6% for women and 10% for men with marginal increases for children’s apparel. The product categories for these two types of products encompass 29% of Costco’s business. Even though Costco is showing only a 3% decline this month over the same month in 2009, it is a worrying trend. They are, however, making up ground in products that tend to be more recession proof such as fine wines, snack foods and tobacco.
Demographics are troubling for Costco’s business model of large volume single size packaging of goods in order to minimize handling and restocking. With an aging population, more single and divorced people and smaller sized families, there are fewer and fewer people who need or want the huge sizes that are offered by Costco. I found it a wonderful boon when I was feeding a …show more content…
In fact, if we consider the data on page c-39 of the case study, it is evident that with less than 10% of the population of the United States, Canadian Costco stores are generating over one sixth of the revenue in comparison with the US with only 75 stores. Canada provides a stable environment with low levels of risk for the company in comparison with other nations. This would increase volumes for manufacturers as well. In many ways it forms and extension of the American market with many similar laws and identical