Retailing ManagementCostco Emer, Orlando, Cook http://www.costco.com.tw
1 2 3 4 Introduction Retailing Strategy Merchandise Management Store Management Contents
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
Bakery Bakery Meat/Fish Delicatessen Fruit Liquor Frozen Food Frozen Food escalator Casher Food Court escalator Retailing Strategy • Layout
Photo Optical Pharmacy Office Supplies Jewelry/Watches Office Supplies Jewelry/Watches escalator escalator Retailing Strategy • Layout
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 Management
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