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