Free Essay Example - The Costco Craze

Costco is a famous discount wholesaler that was started in early 1983. The warehouse has developed significantly over time and became the 5th and 11th largest retailer market in the United States of America and worldwide, respectively, by 2004. By 2007, the growth has been increasing where the sales by store and online have reached annual revenue of about $1 billion (Baek et al. 8). The average sales in every location are over $130 million. Such success has been contributed to their loyalty to the customers and well-protected happy employees.

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To begin Jim Sinegal comments, says: “Costco can offer lower prices and better values by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, and billing and accounts receivable. We run a tight operation with extremely low overhead, which leads to passing on dramatic savings to our members.” Following this quote, it is almost becoming evident that the company has a vision and goals as it prioritizes customers (Baek et al. 7). Many other vital aspects have contributed significantly to the success of the Costco Craze.

The Costco business prioritizes its customers. However, this aspect is standard in every market, but reflect the $1.50 hot dog in Costco. The price has almost remained constant, and it has not budged for about 15 years. The company has established its meat plant and bakery, which has helped maintain costs and keep low prices. Nevertheless, any change in their prices has been recognized as slow price increases. Costco’s decision to have such operations was to do the right thing to the customers to create fulfilling impressions and loyalty. Such focus goes deep into the customer’s preferences (Steenkamp 155)

Besides, Costco can allay customers’ fears that arise when making decisions on their purchases. Such concerns include the right product for their needs, best prices, and the quality of the products. They take the risk of purchasing through generous product return policies in the globe (Steenkamp 168). Having good return policies encourage customers to buy without considering the fear of faulty products. To add on prices concerning customer fears, the company keeps track of competition in both offline and online. They generate hard bargains with the suppliers to ensure that there is a super competitive environment. A markup of up to 15 percent buying at the right price will give a very competitive sales price. Having an influential customer-focused culture accounts for success in the Costco business (Baek et al. 9).

Costco also motivates its employees. Eventually, there would be no better services for your customers with less concern for your employees. Costco has connected its vision towards the success of employees, customers, other businesses, and communities. Its vision has three essential parts, including values, reputation, and mission (Steenkamp 170). The Costco vision focuses on the organization that enables business efficiency, serves the customer better, positive communication, and helps people make ends meet. The values have been summarized by the phrase “always do the right thing, even when it hurts.” There is evidence of how the company serves faithfully to its employees and treats them as a family. The reputation has been built through the provision of quality goods and services with attractive prices (Baek et al. 11). It is vital for the safety of people and the members they love. Every retailer envies the loyalty of customers that have been developed in Costco.

Moreover, giving persons or the third-party freedom of expression to generate ideas and opinions of the third party has strengthened the Costco connection culture. For instance, Sinegal narrated the early days of the business when the local liquor license inspector was questioning everything (Baek et al. 16). Little did they know that the inspector’s questioning would be of great help someday in their business for what they would face ahead. Difficult conversations can generate new plans and ideas. Such an attitude of honesty and humility makes Costco stronger and smarter.

Also, private labeling has been a better plan for Costco. The Kirkland brand, the generic product label of Costco, is one of the best and smartest ideas. The reason is that the Kirkland products are commonly known to be better than the known brands and cost significantly low. A large amount of market volume paves the way for Costco to source and provide excellent contracts with Kirkland products (Baek et al. 13).

Valuing suppliers builds a strong relationship in the sector of supply chain management. Comparatively, Costco has enabled a close working environment with their suppliers by helping them discover plans which can promote their businesses. Costco is devoted to supplier diversity and utilizes regional sources for fresh produce such as meat extensively. Costco’s connection has many articles meant to recognize suppliers for their smarter and ethical approach to the company and its products (Arnold et al.).

In conclusion, Costco has settled on the fundamentals. Its philosophy and values remain constant since the start in 1983. There are no changes to their customer and employee satisfaction despite the incredible growth over the past years. The company connections enable the competitive benefits that have sustained its impressive record in performance. Meanwhile, the company leaders are now preparing future generations of Costco leadership to connect firmly to the Costco family and its outstanding services to its customers. In this case, the family refers to the entire community of Costco company, including the employees, employers, and loyal customers. The company leadership has been a successful one built under one common culture, a culture of predominant attitudes, behaviors, and language of Costco.

Works Cited

Arnold, Denis G., Tom L. Beauchamp, and Norman E. Bowie. Ethical theory and business. Cambridge University Press, 2019. https://books.google.co.ke/books?hl=en&lr=&id=FHG9DwAAQBAJ&oi=fnd&pg=PR17&dq=Arnold,+Denis+G.,+Tom+L.+Beauchamp,+and+Norman+E.+Bowie.+Ethical+theory+and+business.+Cambridge+University+Press,+2019&ots=FfeMgQusAx&sig=iiHO8HSq8svlc_eP5ptnW1V4uxs&redir_esc=y#v=onepage&q=Arnold%2C%20Denis%20G.%2C%20Tom%20L.%20Beauchamp%2C%20and%20Norman%20E.%20Bowie.%20Ethical%20theory%20and%20business.%20Cambridge%20University%20Press%2C%202019&f=false

Baek, Jung-Yim, and Shuguang Wang. “The Localization Strategies and Success of Costco: Focusing on a Japanese Mature Retail Market.” The International Journal of Industrial Distribution & Business, vol.9, no.2, 2018, p. 7-16. http://dx.doi.org/10.13106/ijidb.2018.vol9.no2.7.

Steenkamp, Jan-Benedict. “Organizational Structures for Global Brands.” Global Brand Strategy. Palgrave Macmillan, London, 2017, p. 151-179. https://doi.org/10.1057/978-1-349-94994-6_6