Retailing Management
Costcohttp://www.costco.com.tw
Emer, Orlando, Cook
Contents
Introduction1
Retailing Strategy2
Merchandise Management3
Store Management4
Introduction
Membership Warehouse Club best possible prices on quality brand-
name merchandise wide selection of merchandise convenience of specialty departments exclusive member services
Introduction
History first location opened in 1976 under the Price Club
name San Diego, CA, U.S.A. small businesses serving a selected audience of
non-business members first Costco warehouse location opened in Seattle,
WA, U.S.A. Taiwan's first location opened in 1997 in Kaohsiung
- three in Taipei market, one in Hsinchu, one in Taichung, and one in Kaohsiung.
Retailing Strategy
Retail Market Strategy Target Market Strategy
• Primary target market is small businesses• Marketing teams contact local businesses, trying to
persuade them into purchasing a business membership
• Direct mail marketing to attract potential customers that meet their customer profile
• Reliance of members using word-of-mouth to attract new members to the company
Retailing Strategy
Retail Market Strategy Products
• Low prices on selected private and a limited selection of nationally branded products in a wide range of merchandise categories
• Kirkland Signature: currently carries 330 private label items which make up 15% of their sales (2006)
• Carry only around 4,000 active stock keeping units• Some offerings rotate in and out of the warehouse
based on season, and other factors.
Retailing Strategy
Retail Market Strategy Promotions
• Advertising: Costco limits its advertisement to direct mail to potential new customers.
• Public Relations: Costco allows their customers to sample many of their products as they walk through their warehouse.
• Personal Selling: When a Costco warehouse opens in a given location, marketers contact businesses around the area to see if they would be interested in becoming a member.
• Sales Promotion: Costco limits its marketing and promotional activities to new warehouse openings.
Retailing Strategy
Retail Market Strategy Price
• Aggressively buy from a handful of vendors• Drive the cost down for members and sell in volume• Individual memberships (Gold Star memberships)• Business memberships• Costco China Trust co-branded credit card
Retailing Strategy
Retail Market Strategy Presentation
• Warehouse-type setting• Merchandise is generally stored on racks above the
sales floor and displayed on pallets containing large quantities of each item.
• First things: the most expensive products (diamonds, flashy toys)
• Understand their customers in a given location• Entice customers to maximize their sales
Retailing Strategy
Layout
escalator
escalator
Fruit
Frozen Food
Frozen Food
Casher
Food Court
DelicatessenMeat/FishBakeryBakery
Liquor
Retailing Strategy
Layout
escalator
Pharmacy
Jewelry/Watches
Jewelry/Watches
escalator
OpticalPhoto
Office Supplies
Office Supplies
Retailing Strategy
Retail Market Strategy Personnel and Customer Service
• Optical, Photo, Tire Center, Food Court, Pharmacy.• Keeps labor costs low by squeezing more sales out of
fewer people.• Limits the amount of employees they have on the
sales floor• No commissioned sales people that work at Costco:
customers do not feel pressured by Costco workers to purchase a given product.
• Two employees in the cashier line
Retailing Strategy
Human Resource ManagementManager
Deputy Manager(Commodities)
Deputy Manager (Administration)
Receiving Manager
Product ManagerExecutive Manager
Cash Manager Meat Manager Bakery Manager
Food Director Member Director
Hardware Director
Clothing Officer
Tire Factory
Push driver
Maintenance Officer
Cash Officer
Cash Officer
Cash Officer
Cash Officer
Cash Officer(Seasonal)
Retailing Strategy
Human Resource Management Human Resource
• Estimates for the number of employees in the store – the number of check-out counters : 9*2*2 = 36
– maintenance : 2
– cleaning crew : 6
– operations crew : 7
– bakery crew : 4
– butchery crew : 4
– A group who introduce Costco : 5
Retailing Strategy
Human Resource Management Objectives
• To make every new employee to increase experiences by facing every problem.
• To raise up positions of employees from internal resources.
• Training Process: every stage for 3 months
Retailing Strategy
Human Resource Management Organizational Structure and Plan
• Code of Ethics– obey the law– take care of members– take care of employees– respect suppliers– reward shareholders
• Low turnover of employees– Comfortable environment– Higher salaries than others in the industry for 1 to 2
Retailing Strategy
Information System
Retailing Strategy
Information System IBM Point of Sales (POS) System
• IBM SurePOS 4694 Supermarket Application• AS 400
Advantages• Successfully shorten checkout time• Help inventory management• Save accounting human resources• Provide structured analysis by sales information
Retailing Strategy
Customer Relationship Management Services
• Unconditional double guarantee– On merchandise: Every product sell with a full refund– Refund membership fee in full at any time dissatisfied
• Unlimited Drink Bar• Feedback Box• Serve members free breakfast to know customers• Focus on satisfy all the need of members
Merchandise Management
Managing Merchandise Assortments Merchandise category
• Jewelry/Watches• Automotive• Computers /
Electronics• Office Supplies• Small Appliances• Books / Media• Seasonal / Toys
• Hardware / Storage• Apparel• Lawn / Garden• Sporting goods• Domestics / Furniture• Fresh Meat / Fish• Frozen Food• Tobacco / Liquor
• Fresh Delicatessen• Snacks• Bakery• Health / Beauty Aids• Photo• Optical• Food Court• Tire Center• Pharmacy
Merchandise Management
Warehouse Location
• Amount of people• Land cost• Nearby industry structure• Nearby average annual income• Acceptability of membership
Target• White-collars• Employees in Science Park
Merchandise Management
Warehouse Object flow
• Direct transportation from suppliers to stores• Uni-purchase of foreign products to stores• Ware housing• Three layers: 1 for display, 2 and 3 for inventory
Suppliers• Quality• Price• Brand name
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