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Warehouse Club competition

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by

Casey Campbell

on 21 August 2013

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Transcript of Warehouse Club competition

Wholesale Club Industry
North American
ELEMENTS
A BRIEF OVERVIEW OF THE NORTH AMERICAN WHOLESALE INDUSTRY
FIVE
FORCES
STRATEGY
SWOT
ANALYSIS
RECOMMENDATIONS
AN ANALYSIS OF THE TOP 3 LEADING WHOLESALE CLUBS IN NORTH AMERICA.
Sam's
Club
COMPETITION
BJ's
Wholesale
Costco
FINANCIAL
PERFORMANCE
A
AMBER BARNES
CASEY CAMPBELL
TRACY FIELDS
NATHAN MATTINGLY
WANDA TRIMM
A
COMPETITION IN THE WHOLESALE INDUSTRY
Rivalry among competitors is high with the main driver being low prices. With such large economies of scale and the lack of a distributor, warehouse clubs are able to offer direct discounts on items. With low prices being the driving force of the industry, each warehouse club must differentiate itself in some way to create an advantage over its competitors.
Five
Forces
High barriers to entry,
economies of scale, low
growth potential and
strong industry members.
Buyers are varied,
well informed, influence prices and have low switching costs.
There are many substitutes
with zero differentiation.
Many products are
commodity based.
STRONGEST
HIGH
STRONG
LOW
Competition is the strongest force. A broad assortment of similar products make differentiation and brand establishment difficult.

Suppliers have large
input supply, but lack
ability to enhance
products.

WEAK
Do all 3 clubs
have like strategies?
What are the differences?
Costco's strategy is to sell mostly private label products
at significantly lower costs than branded items.
Sam's Club features
lowest membership
cost of the top three
warehouse clubs in
North America and
sells mostly branded products.
The strategy of BJ's Wholesale differs from Costco and Sam's Club in that BJ's focus is more customer-service
based with emphasis
on express check-outs
and aisle markers.
All three warehouse clubs are similar in strategies in that they sell top-quality products at a low cost. Costco and Sam's Club share like features in their cross-docking distribution technique.
Which Warehouse Club is the strongest financial performer?
Costco
From 2006-2009
*Was highest in sales figures.
*Had a profit margin of 12-13%
*Debt to asset ratio is minimal with never being higher than .56 during the stated period

Is the global expansion of Costco outside of North America considered financially successful?
Operations outside of North America have been very successful for Costco with sales nearly doubling in their Canadian operations and tripling in Taiwan. Even with the slight decline in revenue during 2008-2009 their global expansion has been a success and no changes should be made.

Where will these clubs be five years from now?
Will Costco still be leading the industry or will Sam's or BJ's gain ground over Costco?
With minimal external forces impacting the industry there should not be many changes. Costco has made its impact on the market with their strategy of offering high quality products at low costs.

Sam's Club and BJ's will continue in growth but there is no forseeable change in that Costco will continue to lead the industry.
Costco
Sam's Club
BJ's Wholesale
* Continuously re-evaluate the market place and industry
* Consider further expansion of warehouse locations
* Continue reinforcing their current strategy as the
lowest-cost provider with the highest quality of a product
* Focus on long term financial performance
* implement a stronger advertisement campaign to build a stronger customer base


LikLike
* Like Costco, implement a stronger advertisement campaign to build a stronger customer base
* Focus more on strategy for more global expansion
* Increase membership rates to create larger profits
* Expand by building new stores and increasing a stronger customer base
* Differentiate themselves as a player in the warehouse industry
* Price merchandise to compete with Costco and Sams
Full transcript