Executive Summary
North America’s wholesale club industry is characterized by three major competitors. These competitors include Sam’s Club, Costco Wholesale, and BJ’s Wholesale Club (Thompson, Strickland, & Gamble, 2012). These warehouse clubs offer a wide range of products such as books, food materials, electronics, office supplies, and tires.
The competitors use reduced prices to attract more customers. These clubs attract many clients such as businesspeople and churches. Costco commands over 56 percent of the market share. Sam’s Club has a stake of 36 percent in the industry. BJ’s Wholesale Club has around 8 percent market share. Competition in this sector is “based on prices, locations, services, and merchandise quality” (Thompson et al., 2012, p. 55). The other competitors include Kohl’s, Dollar General, Office Depot and Staples, and Target.
Introduction
The level of competition in the warehouse and wholesale club has grown steadily within the past one decade. The three leading competitors focus on specific strategies and business practices in order to emerge successful. Costco Wholesale, Sam’s Club, and BJ’s Wholesale Club use powerful approaches in order to produce the best outcomes.
Each firm has its unique strengths and weaknesses that determine the level of performance in the sector (Thompson et al., 2012). This discussion therefore identifies the specific issues, strategies, and problems that affect these competitors.
Identification
These competitors focus on specific strategic issues in order to emerge successful. For instance, Costco’s markets quality products at reduced prices. The main goal is to make Costco more competitive. The firm stocks specific products that could be marketed at lower prices. The price-reduction philosophy makes it easier for the firm to increase its sales (Kotler & Keller, 2012). This business strategy supports the firm’s goals.
The treasure-hunt merchandising strategy is used to market expensive products that can attract more customers. However, the firm sources such merchandise from the gray market. The company uses mail programs and special campaigns to advertise its products (Thompson et al., 2012). Costco Wholesale’s distribution network is also sustainable. Online marketing has also been embraced. The presence of good leaders such as Jim Sinegal continues to support the firm (Thompson et al., 2012).
Sam’s Club has many stores in the United States, Mexico, Brazil, Canada, Puerto Rico, and China. Some of the underperforming stores have been closed in the recent past. The firm’s stores have “sparse décor, concrete floors, and wooden shelves” (Thompson et al., 2012, p. 77).
The firm’s products include grocery items, soft-goods, and hard-goods (Thompson et al., 2012). The “company’s treasure-hunt goods are usually less upscale and cheap” (Thompson et al., 2012, p. 68). Cross-docking strategies are used to distribute most of the firm’s products. Shipping is also done within 24 hours.
The main strategy used by BJ’s Wholesale Club is to have high-quality merchandise. As well, prices are reduced in order to attract more customers. The firm stocks “a wide range of product assortment” (Thompson et al., 2012, p. 70). The firm also uses three price categories in an attempt to attract more buyers. Online shopping is also becoming common in the firm. Clustering technique is also “used to improve efficiency, marketing, and brand positioning” (Thompson et al., 2012, p. 71).
The Inner Circle members are supposed to pay a fee of 45 US dollars annually. The use of Information Systems (IS) has made it easier for the firm to improve its efficiency. Community involvements are used to attract more customers. The company also uses powerful advertising strategies. The use of personalized marketing also attracts more customers. The company’s Charitable Foundation supports the needs of many communities.
Analysis and Evaluation
Each of these three companies has its unique weaknesses and strengths. A proper understanding of such weaknesses can be used to design better business strategies. The level of competition is high in this market segment. As well, new opportunities have emerged such as computer technologies and changing consumer behaviors. A proper SWOT Analysis can be used to understand the issues affecting every competitor.
This tool can “identify the major aspects that make the internal activities of such companies successful” (Kotler & Keller, 2012, p. 48). As well, the tool will identify the major threats and weaknesses affecting the firms. The SWOT Analyses presented below indicate that BJ’s Wholesale Club will succeed in the future. BJ’s Wholesale Club has the potential to achieve its goals much faster.
Costco SWOT Analysis
Sam’s Club SWOT Analysis
BJ’s Wholesale Club
Recommendations
Costco Wholesale is the leading player in the targeted industry. However, it should embrace the power of modern technologies in order to improve its business strategy (Grewal & Levy, 2011). The company should also consider the level of competition and identify new strategies.
It should also hire the best candidate to succeed Jim Sinegal. Sam’s Club can also embrace similar recommendations and support its failing stores. This move will produce the best results. BJ’s Wholesale Club is currently using powerful strategies that can produce the best outcomes (Finch, 2012). Sam’s Club and Costco should embrace the power of corporate social responsibility (CSR) in order to support many communities. Modern technologies should also be used to support the strategies embraced by these competitors.
Reference List
Finch, J. (2012). Managerial Marketing. New York, NY: Bridgepoint Education.
Grewal, D., & Levy, M. (2011). Marketing. New York: McGraw Hill.
Kotler, P., & Keller, K. (2012). Marketing Management. Upper Saddle River, NJ: Prentice Hall.
Thompson, A., Strickland, J., & Gamble, E. (2012). Crafting and Executing Strategy: The Quest for Competitive Advantage. New York, NY: McGraw-Hill.