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On last week’s fiscal second-quarter conference call with analysts, Costco officials noted that the company is taking several steps to reach a younger demographic, including more social media outreach. Is there anything (e.g., bulk buying) in Costco’s business model that handicaps the chain when it comes to a younger demographic?
Costco recently reported its fiscal third quarter numbers and they were, no surprise, strong. For the latest period ending May 12, comparable club sales in the U.S. were up six percent. What do you think are the biggest reasons for Costco’s continuing success?
In the early to mid 1990s there was great concern in supermarket circles about so-called “alternative channels.” As everyone knows, warehouse clubs have been very successful, although not to the point of driving supermarkets out of business. Do you think warehouse clubs are better positioned to gain greater share of the CPG market in the next three years?
Costco is moving in on the territory of Express Scripts and CVS Caremark with the launch of Costco Health Solutions, a pharmacy benefits manager offer designed for small and midsize businesses. What is your reaction to Costco getting into the pharmacy benefits manager business?
There will be skeptics, but Rosalind Brewer, CEO of Sam’s Club, since January, believes the company has a chance to catch up to Costco — or at least make it a competitive race. What do you think of Sam’s Clubs strategies and tactics to grow faster? How do you think Costco will respond?
While retail execs appear to periodically draw the ire of activists for funding certain political or religious causes, few have been as outspoken recently as Jim Sinegal, Costco’s co-founder and former CEO, and Dan Cathy, Chick-fil-A’s president and COO. How outspoken should retail executives be?
The announcement that Costco has reached agreement with Premier Retail Networks (PRN) to expand its in-store digital network to include a dedicated 3D content channel is big news, but also brings up questions. Will access to 3D content in stores, Costco and elsewhere, have an appreciable effect on unit sales?
New research from Market Force Information shows that consumers are driving past traditional oil company gas stations to fuel up at big box stores. It doesn’t take a rocket scientist to figure out why. Do you see more chains currently not in the business adding gas stations and/or loyalty programs tied to gas?
Costco is no lightweight when it comes to selling online, generating $2 billion a year in sales and being among the top 20 online merchants in the U.S. Yet that performance, while respectable, is not what the Costco organization expects of itself. How important is it for Costco to improve its online performance?
Americans are very sensitive to increases in gas prices. Costco, Kroger, Walmart and many others have dangled gas savings in front of consumers with great effectiveness. Will we see big boxes put independent and small chain gas stations out of business in large numbers in the years ahead?
Earlier this week, the Supreme Court announced that it would take up the gray market/copyright issue again. Should retailers be able to go outside normal distribution channels to purchase and sell gray market goods or should manufacturers be the sole party to determine where products are sold?
It’s not new news that retailers are looking to upgrade their private labels. Today, many see the creation of national brand equivalents at a lower price as the starting point for their business and are now looking to deliver super premium items at premium level prices. What are the keys to success in the premium and super premium segments of private label?
Beyond low margins, limited assortment also plays an important role in Costco’s success. While all the leading club chains expanded their assortments during the past five years, Costco’s grew the least and its SKU count remains by far the skimpiest. What are the pros and cons of Costco’s limited assortment strategy?
Everyone in retailing knows that it’s a huge business, and while the quantity of jobs is without dispute, most of the positions within the industry are low-paying. A report on The New Yorker website shows retailers that offer higher pay generate greater sales per square foot and per employee. Is there something wrong with the current labor compensation model at retail?
When former CEO Jim Sinegal announced he would retire on January 1, he and his successor, Craig Jelinek, made a point that very little would change. And if by that they meant continued strong financial results, they were right. How big an upside do you see for Costco’s warehouse club business and Costco.com in North America?
Jim Sinegal, the man synonymous with Costco, has decided to retire as CEO on January 1. Mr. Sinegal, who will stay on as a member of the company’s board and as an advisor, will be succeeded by Costco president and chief operating officer Craig Jelinek. Why aren’t there more Jim Sinegals in retailing? What do you think were his greatest accomplishments at Costco?
Delaying the inevitable is rarely an admired tactic, but Costco does just that when it comes to raising select food prices in an inflationary period. What do you think of Costco’s move to selectively delay price increases?
Costco (that’s right, Costco) is testing full-service wedding boutique departments at some of its clubs. Will women go to Costco to buy their wedding gowns? Will Sam’s and BJ’s follow Costco’s lead?
Apparently ruffled over pricing policies and limited access to product, Costco confirmed last week that the wholesale club is phasing out all Apple products from its doors. What do think of Costco’s move to phase out all Apple products from its stores?
Just-in-time is a familiar methodology, designed to keep cash flowing and stock levels manageable. More recently, consumers have been getting in on the act. Does it make sense that there is a decline in bulk buying in the U.S?
In the past, Costco has opened the occasional club in a mall. Now, however, the company is making a push to put its stores in shopping center spaces that typically house department store anchors. What is your assessment of Costco’s move into mall locations?
Most people in the retail business have heard the lore of the tire return at Nordstrom. Although there were some odd circumstances, the tale is nevertheless true and serves as an important example of going the extra mile for the customer. What are the pros and cons of generous return policies such as Costco’s?
Persuading the public to act on product recalls has become increasingly fraught as the number of recalls increases, according to a report in The Washington Post. What can be done to minimize risks associated with consumers tuning out recall messages?
While the market potential for Costco is large, its SKU-constrained environment, margin requirements, private label acumen, and regional buying prowess place numerous challenges on CPG companies versus other channels, according to a recent report from L.E.K. Consulting. What do you see as the unique challenges for CPG companies in selling to Costco and other warehouse clubs?
The U.S. Supreme Court has agreed to hear a case that pits the Swiss watchmaker Omega against Costco over the warehouse club’s sales of the company’s timepieces bought on the “gray market.” Is the gray market a legitimate means for retailers to obtain goods from overseas for resale in the U.S.?
Costco’s first store in Manhattan, opened in East Harlem last November, has underperformed so far. The subpar showing is being blamed on everything from issues around parking access to whether bulk selling ultimate works in Manhattan. How might have Costco misread the New York City market?
Cash is king. During the past two years, this age old encouragement from our fathers has been driven home with punctuation. In the loyalty and rewards game, cash is king in a different way. Will cash back rewards continue to become more and more popular with consumers, or is it just a temporary reaction to this recession?
Wall Street may have had problems with earnings per share coming in lower than predicted for Costco and BJ’s yesterday, but the numbers suggest those two chains along with Sam’s are in a pretty good shape compared to many others in the grocery business. Are warehouse clubs fully exploiting the advantages they have over retail food competitors?
In some cases it’s hard to separate certain chief executives from their companies, as with Costco where Jim Sinegal is synonymous with a mention of the retailer’s name. Do you see Craig Jelinek as a good choice to replace Jim Sinegal when he eventually steps down from Costco?
Sol Price, one of the earliest pioneers of the warehouse club channel, who opened Price Club in San Diego in 1976, died Monday at the age of 93. What do you think are the greatest contributions that Sol Price made to retailing?
Coca-Cola is the largest soft drink manufacturer in the world. Costco is the largest warehouse club operator in the U.S. As of now, the two companies are not doing business together following Costco’s decision to delist Coke’s products in its clubs. Which party is hurt more by Costco’s decision to stop selling Coca-Cola products?
According to the Bureau of Labor Statistics, the recession is putting more men out of work than women. That has led to an increase of stay-at-home dads who are increasingly taking on the traditional women’s roles of childcare, housework, school life, and much of the shopping. What, if anything, should grocers and other stores be doing to accommodate the growth in stay-at-home dads?
Value retailers such as Costco and BJ’s Wholesale Club with reputations for selling quality merchandise at low prices are benefiting from positive buzz in the blogosphere, whereas some traditional department stores (Macy’s and Sears) are fairing poorly. How much do blogs influence a retailer’s reputation?
Costco, Starbucks and Whole Foods are looking for an alternative to both the proposed law that would enable retail workers to become members of a union by signing a card and the current voting system that labor activists claim gives management the ability to crush any efforts to organize. Should they be looking for a compromise over card check or should they simply oppose it as most retailers have done in the past?
Retail refund policies have been an ongoing concern for retailers. The explosion of fraudulent refunds has driven retailers toward policies and guidelines designed to protect themselves. How do you see the current economy affecting return/refund policies? How do you balance the need to control fraudulent refunds with the danger of turning off honest customers?
Having been told repeatedly that fish is an important part of a balanced diet, consumers are now finding that it isn’t really that simple. Three different stories in the past week have outlined just some of the issues causing confusion that manufacturers and retailers have to try to resolve for the sake of their customers and profit margins. With gray areas surrounding the safety of fish consumption and sustainability of the supply, is there too great a risk to retailers’ credibility?
Is Costco looking to “make a brand new start of it in old New York”? A developer on the Upper West Side is reportedly in talks with Costco to open the chain’s first warehouse club between 59th and 61st streets in Manhattan. How likely do you think it is that Costco will open a club in Manhattan?
Crocs Inc. earlier this month became the latest company to freak out upon finding its hot selling shoes on the floors of Costco. Their arrival is apparently part of a long-standing strategy at Costco to look to secondary markets to acquire brands that won’t sell directly to Costco. Crocs found some cases where it believes its products were sold indirectly to Costco. Do you think Costco’s “diversion” buying strategy is savvy or a little sketchy?
There’s no doubt that many American consumers and businesses are going through a rough patch at the moment. For warehouse clubs, however, the weak economy has proven to be something of a boon as savings minded consumers look for the low unit prices that come with buying in bulk. Do you expect that warehouse clubs will continue to perform well should the economic conditions stay the same or worsen?
Frustrated by the government’s handling of the largest meat recall in U.S. history, a few food companies are holding off on destroying the meat in hopes that it could be donated or put back in stores. According to The Wall Street Journal, companies like Costco Wholesale Corp. and Advance Food Co. have pulled the meat from circulation but are holding onto it for now. Should some safeguards be set up for questionable recalls to avoid a full-scale disposal of products?
Abuses by a few have led to less liberal return policies for many shoppers this holiday season. Fraudulent post-holiday returns are expected to top $3.7 billion this year, according to the NRF. As a result, many retailers are reinforcing or introducing new policies to reduce return fraud. Should retailers in general be more or less restrictive in their return policies? What can retailers do to prevent “serial returners” from frustrating the return process for average customers?
Costco has created a recycling program that pays members for trading-in computers and other electronics. The company’s website has an interface that allows consumers to enter information about the product they wish to recycle and receive the estimated amount of Costco Cash Card dollars they will receive in return. What benefits will Costco accrue from its trade-in/recycling program with GreenSight Technologies?
Continuing to put its employees needs over investors, Costco Wholesale Corp. last week announced plans to increase wages for its hourly service workers in its U.S. stores. Do you think Costco is being overly generous to its store employees and not doing right by shareholders?
Costco, it is well documented, is not the typical retailer. While all claim to be focused on the customer, it is one retailer that demonstrates that commitment in clear and simple turns on a daily basis. One such example is the warehouse club’s return policy. Why do so many retailers, implicit in areas such as product returns, behave as if their customers are out to cheat them?
If you’re looking for the Scallywag Sloop Pirate Themed Club House, forget about going to your local Costco Warehouse Club to buy it. It just isn’t there. Of course, the company would be happy to sell you this unique item for only $18,499.99. The only hitch is you’ll need to go to Costco.com to buy it. What is your analysis of the approach Costco takes to online selling?
As part of its mission to provide personal finance advice to its readership, Kiplinger’s Personal Finance is investigating the subject of luxury goods shopping in the warehouse club environment, and looking to the RetailWire community and BrainTrust panel for professional insights. In the areas of price, experience and selection, what are the best strategies for consumers shopping for luxury goods in warehouse clubs?
While club members are very happy with Costco’s willingness to accept returns, there is a negative side for the retailer. The company has seen a number of product returns on more expensive consumer electronics because club members were having trouble with installation. To address the situation, Costco has begun looking at an installation service for members purchasing consumer electronics. What will an in-home installation service do for Costco’s consumer electronics business?
Wal-Mart, Costco and Home Depot are among the retail powerhouses looking at the potential of automated carwashes to bring in consumers and grow their already impressive top and bottom line performance. The big box operators are expected to use the same strategy that has helped them dominate in other product and service categories they’ve entered in the past – cutting prices. A basic exterior wash at a big box facility can cost as little as $4. What factor do you believe is most important in a consumer’s decision in choosing a carwash?
As it turns out, the Costco of the Internet is Costco. The enormously successful warehouse club retailer has taken the same philosophy that has made it great in the real world, a limited selection of luxury goods at very low prices, and applied it to its online operation. What is your evaluation of the opportunities/challenges facing Costco as it attempts to further grow its online business?
Jim Sinegal, the CEO of Costco, says he pays attention to Wall Street analyst’s criticism of how he runs the warehouse club retailer. He simply doesn’t let it interfere with doing what he believes is in the best interests of the company, its employees and customers. One of the major criticisms of Mr. Sinegal is that he is too generous with employee compensation packages. What are the biggest reasons for Costco’s success?
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