This article explains how Costco outperforms Walmart and Target. Costco does this by concentrating on driving sales, not spending money on advertising, not selling as many brands and paying there employees more and giving them better benefits.
Costco concentrates on driving sales through a no frills approach. The combination of cost savings through lack of advertising and less inventory from different suppliers ultimately give their customers a pricing advantage. This is reflected in their sales growth. From 2006 to 2014, Costco’s revenue has gone up 127.8%. Target and Walmart’s revenue has risen 60.94% and 70.24% respectively.
As a result of staff turnoff, rising employees cost is in many cases an underestimated expense with regards to productivity, efficiency and profitability. Clearly, the Costco operating culture recognizes the importance of longterm relationships with employees, and this has been reflected in the performance of their operations.
Although the culture that Costco has created is difficult to quantify from an operating perspective, it is clear that it has positively impacted the financial performance of the company. Notwithstanding the resources available to Costco’s primary competitors, I believe that the firm will continue to outperform entities with old operating procedures.
Works Cited:
https://ca.finance.yahoo.com/news/costcos-simple-strategy-outperforming-wal-195517929.html;_ylt=Ajf8Z7WBsvZt1U3tHJgrC5ahuYdG;_ylu=X3oDMTBvNTZmMGNkBG1pdAMEcG9zAzUEc2VjA2xuX1VTX2dhbA–;_ylg=X3oDMTBhdnVpNmo3BGxhbmcDZW4tQ0E-;_ylv=3