Warehouse Club Vs. Warehouse Club - What Is Competition in the North American Wholesale Club Industry?

What is competition in the North American wholesale club industry?

Competition among the North American wholesale club industry is pretty high. Everyone tries to achieve lower prices by reducing the cost in displayed items on pallets or inexpensive shelving. They also have very low costs for store décor and fixtures and a comparatively low labor cost because they use fewer personnel to operate their facilities.

The five competitive forces among the industry are very important. However, rivalry among competing sellers, buyers, and suppliers are the most important. Since the case discusses major wholesale clubs, the possibility of these being affected by potential new entrants is pretty low. Industries offering substitute products are not important because in this case we are talking about large quantities. Supermarkets offer the same types of products but the target market is completely different. On the other hand, the pressure of buyers is very important. Customers always look for better prices and the demand in the industry is pretty high. Rivalries among competing sellers play an important factor. The ability to provide better prices depends on the company's relation with suppliers.

Do all three warehouse club rivals-Costco, Sam's and BJ's wholesale - have highly similar strategies?

The three of them have managed to succeed in the wholesale industry. However, Costco has managed to stand up and acquired a better market share. Costco has managed to establish a good relationship with their suppliers in order to provide better prices. They have a low cost strategy that has been successful among the years. In addition, they also have a good strategy to recruit future clients. You always see them in fairs and events trying to engage future customers in activities and offering them coupons so that they get enrol in their membership. Costco focuses on the ability of increasing the membership base and to employ well executed merchandising techniques to induce members to shop more often.

One of the advantages that BJ's has, that could be a weak point on the strategies of the other two, is that it is the only major warehouse club operator to accepter manufacture's coupons, which provided added value for members.

We believe that Costco is the one that has finally manage to achieve all the requirements to succeed. Better prices, larger number of members, good selection of products, and a well trained and pay work force.

Which of the three warehouse club rivals has the strongest financial performer in recent years?

The strongest warehouse club rival has been Costco. Costco has a great strategy of trying to sell everything cheaper than the competitors and maintain their loyal clientele. By reading the case you defiantly tell that Costco is ahead o the competition and knows what they are doing. By comparing the net sales for 2009 it is without a doubt that Costco is doing much better than Sam's Club and BJ's combined. Costco's net sale for 2009 is $69,889 million while Sam's Club net sales are $46,889 million, and BJ's net sales are $9,802.

Costco has 413 US stores and 566 Worldwide, while Sam's Club has 596 US stores and 729 worldwide, and BJ's has 187 US stores and 187 Worldwide.

Does the data in case Exhibit 5 indicate that Costco's expansion outside North America (the U.S. and Canada is financially successful?

The data on Exhibit 5 indicates that Costco's expansion outside North America has financially succeeded because they have been expanding little by little and they are increasing their revenues yearly. Since 2005 they have opened 14 new International stores