Retailing Management Costco http www costco com tw

Retailing Management Costco http: //www. costco. com. tw Emer, Orlando, Cook

Contents 1 Introduction 2 Retailing Strategy 3 Merchandise Management 4 Store Management

Introduction v. Membership Warehouse Club § best possible prices on quality brandname merchandise § wide selection of merchandise § convenience of specialty departments § exclusive member services

Introduction v 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 v 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 v 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 v Retail Market Strategy § Promotions • Advertising: Costco limits 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 marketing and promotional activities to new warehouse openings.

Retailing Strategy v 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 v 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 v Layout Bakery Meat/Fish Delicatessen Fruit Liquor Frozen Food escalator Casher Food Court escalator

Retailing Strategy v Layout Photo Optical Pharmacy Office Supplies Jewelry/Watches escalator

Retailing Strategy v 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 v Human Resource Management Manager Deputy Manager (Commodities) Receiving Manager Deputy Manager (Administration) Product Manager Executive Manager Cash Manager Meat Manager Food Director Member Director Cash Officer Hardware Director Maintenance Officer Cash Officer Clothing Officer Cash Officer Tire Factory Cash Officer Push driver Cash Officer (Seasonal) Bakery Manager

Retailing Strategy v 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 v 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 v 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 v Information System

Retailing Strategy v Information System § IBM Point of Sales (POS) System • IBM Sure. POS 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 v 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 v Managing Merchandise Assortments § Merchandise category • Jewelry/Watches • Hardware / Storage • Apparel • Automotive • Lawn / Garden • Computers / Electronics • Sporting goods • Office Supplies • Domestics / Furniture • Small Appliances • Fresh Meat / Fish • Books / Media • Frozen Food • Seasonal / Toys • Tobacco / Liquor • • • Fresh Delicatessen Snacks Bakery Health / Beauty Aids Photo Optical Food Court Tire Center Pharmacy

Merchandise Management v 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 v 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