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Analysis between 2 companies to se which is better
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Strategies for Membership Based Wholesale Good Firms: A Comparison of Costco Wholesale Corp vs. BJ's Wholesale Club Holdings Anton Kashcheyev, David Vilana, Prince Amanakwah (Group Chelsea) MGS 5010 – 01 Professor Joseph Cho
Tentative Table of Contents Introduction A) Thesis B) Scope a. Market Segments b. Competitors c. Industry Trends C) Research Method D) Company Introductions E) Mission Statements F) Vision Statements Analysis A) Tangible Resources B) Intangible Resources C) SWOT Analysis D) PEGTEL Analysis E) Five Forces Model Internal Mechanisms: A) Strategic Approach a. Corporate Level Strategies b. Business Level Strategies c. Functional Level Strategies B) Core Competencies C) Competitive Advantages D) Internal Resources Final Analysis Insights and Recommendations References (APA Style)
gluten-free foods, or for wealthier customers who want premium products. Costco has stores all over the world, while BJ’s is mostly on the East Coast, so BJ’s may need to expand to compete with Costco in other areas. Both companies face stiff competition from online giants like Amazon, so they need to improve their e-commerce strategies to appeal to shoppers who prefer shopping online. In terms of trends, both stores could improve their sustainability efforts, with Costco already focusing on sustainable sourcing, while BJ’s has an opportunity to be more eco-friendly by offering products with less plastic and more sustainable choices. They also need to use technology better like AI and apps to make shopping easier and more personalized. Lastly, both stores could grow by offering more health- focused products like organic foods, fitness gear, and wellness services like pharmacies. By addressing these areas, both BJ’s and Costco can better meet the changing needs of consumers and stay competitive in a crowded market. E-commerce and Online Competitors With the rise of online shopping, there is a gap in the e-commerce strategies of both companies. While Costco has made progress in online sales, BJ's has been expanding its digital presence. Unfortunately both face strong competition from online giants like Amazon, which offer fast delivery and convenience. We will be exploring how each company can bridge the gap in e-commerce to appeal to digital-first shoppers. This could be a key area for growth. Sustainability and Eco-friendly Products There is growing consumer interest in sustainability, and both companies could explore gaps in their current efforts for sustainability. Costco has been focusing on sourcing products sustainably, but BJ's might have an opportunity to emphasize more environmentally friendly practices, such as reducing plastic packaging and offering more sustainable product lines to attract eco-conscious consumers. Technology As technology continues to reshape the retail landscape, there may be gaps in how BJ's and Costco use innovations such as AI, data analytics, and automation. For example, Costco might fall behind in adding self-checkout systems or mobile apps that enhance the shopping experience, while BJ’s could further develop its tech offerings to make shopping more personalized and convenient. Pricing and Cost Efficiency When it comes to pricing and cost efficiency, Costco is known for offering lower prices per item, especially when buying in bulk. This is because they focus on selling large quantities, which allows them to negotiate better deals with suppliers and pass
those savings onto their members. BJ's, on the other hand, also offers competitive pricing but might be a little more expensive than Costco, as they don’t focus as much on bulk purchases. However, BJ's makes up for this by offering coupons and promotional discounts, which can help save money on individual items. Costco has a strong following thanks to its simple membership model. Members can access a wide range of products at discounted prices, including exclusive items like the Kirkland brand. They also offer an "Executive Membership," which gives additional savings but costs more upfront. BJ's, however, offers more flexibility with its membership options. They have a standard membership as well as a “Perks” membership, which provides extra benefits like additional discounts, a longer return policy, and exclusive coupons. This variety in membership options may appeal to different types of shoppers. Our term project will seek to identify marketing information like mission statements and product comparisons and which company is better overall for both BJ's Wholesale Club and Costco. We will conduct research to see which market is better and where they lack in some areas and where they can improve. We will then offer our findings of BJ's and Costco’s strategic approaches, including their corporate, business, and functional strategies. We will report on both firms’ core strengths, competitive advantages, and internal resources.
5. Customer & Market Behavior Analysis Conduct customer sentiment analysis by reviewing online reviews, customer feedback, and social media discussions. Compare spending habits and shopping frequency among BJ’s and Costco members. Evaluate pricing perception (e.g., do customers feel they get better value from Costco’s bulk model vs. BJ’s discount-driven approach?). 6. Supply Chain & Operational Efficiency Analysis Examine supply chain logistics to compare how each firm manages costs, inventory, and distribution. Investigate how Costco's global supplier network differs from BJ’s regional partnerships. Analyze the impact of warehousing automation and technological innovations on operational efficiency. 7. Financial & Economic Performance Analysis Compare financial performance using key metrics like revenue, net income, profit margins, and stock performance over time. Analyze cost structure differences, particularly in supply chain costs, operational expenses, and marketing budgets. Assess how economic downturns (e.g., inflation) impact their membership and spending patterns. 8. Digital Transformation & E-commerce Strategy Compare how each company is adapting to the shift toward online grocery shopping and curbside pickup. Evaluate e-commerce platform effectiveness, online membership engagement, and digital payment options. Assess the role of third-party partnerships (e.g., Instacart, DoorDash) in enhancing online shopping experiences.
Tangible Assets Costco and BJ’s both have a pretty significant list of assets. On the tangible asset front, both Costco and BJ’s have their key bases of their sales, being the warehouse style stores, distribution centers, storage facilities, trucks for transport, and other equipment used within these facilities. On top of that, each business boasts thousands of employees across various business sectors (corporate, distribution, and main stores). Lastly, their own personal internal POS systems, e-commerce platforms (built within their websites), and IVS’s are a key tangible asset within their businesses. Intangible Assets On the intangible asset front, both businesses have strong brand recognition (Kirkland under Costco for instance has become a staple of shopping at their stores), high trust of from their customers due to low-costs and high quality products, and perceived exclusivity due to their membership model requiring an annual subscription. Their corporate cultures are a little different, however, they do both provide high salaries for their employees which leads to low turnovers. The other intangible assets that both businesses have, are their relationships; this includes relationships with suppliers for bulk-purchasing, and lastly their own private labels themselves. What is potentially the biggest intangible asset for these businesses though, is all of the data that they are collecting on consumers: due to the membership requirement, these businesses are able to analyze customer specific data in all areas with clean demographic information included, as well as provide custom recommendations on future purchases.
BJ’s Strengths
consumers visited Costco at least once last year, and 87% of them returned multiple times, according to Numerator. On average, a shopper visits Costco about every two weeks—around 30 times annually—spending close to $100 per trip. This translates to an average yearly spend of over $3,000 per customer.
cost of goods for BJ’s. Since BJ’s operates in a price-sensitive wholesale market, such cost increases may affect its pricing strategy and profit margins.
and efficient payment processing systems. This also improves checkout speed and customer convenience.
mind, the consumer is very sensitive to price changes, so an increase in either membership costs or the costs of the goods within their stores risks dropping the number of customers shopping there. Because of that, the consumer has high bargaining power. Threat of New Entrants: Getting into this industry is incredibly difficult. The main selling location, is required to be a warehouse, leading to high building, land, and construction costs. Then on top of that, you need to ensure that you have strong relationships with key suppliers who can provide products in significant bulk quantities at a low cost (most of which have already signed agreements with competitors within the industry, lowering the availability of such suppliers). On top of that, you need to have a supply chain built out to transfer all of these goods not only between suppliers and your main storage warehouses, but locations as well. Overall, such a requirement for an economy of scale such as this is very high, and because of that, the threat of new entrants is low. Threat of Substitutes: We live in an age of innovation – less than 100 years ago, the idea of a supermarket that had a major location in every single key and sub-key city in the nation was unthinkable. Since then, our understanding of how to get products to consumers has only continued to evolve and change. Now, this industry has not only local supermarkets, but those very same major markets, and online retailers to compete with. And at the end of the day, the buyer will purchase and go to the location that can offer goods and services at the lowest possible cost. Because of that, the threat of substitutes is not only high currently, but will remain high as long as the business continues to exist. Industry Rivalry: The industry already has significant competition within it – the key 3 players are Costco (with 60% of the market share), Sam’s Club (with ~25% of the market share), and BJ’s (with ~15% of the market share) ( National Retail Foundation ). As only 3 major companies make up the majority of the industry, the competition between them is incredibly high for suppliers, to ensure their costs remain low, and lower membership costs, to bring in higher member counts. Because of this, industry rivalry remains high. Core Competencies:
customers. Its efficient supply chain ensures quick turnover of inventory and cost-effective sourcing. Private Label Brand: Costco created the Kirkland brand to ensure that they are able to provide a low cost high quality product, that is fully under their control. With that in mind, unlike the other businesses in it’s category, Kirkland is seen as high quality and because of that, they are able to continue expanding the line of what is available from them, reaching from food to clothing to office supplies and medicine. This helps Costco not only maintain their margins, but build brand loyalty as well. Membership Model: The membership fee generates a steady stream of revenue, regardless of individual product sales. This model also helps cultivate a sense of exclusivity and encourages customer loyalty, with members being more likely to return regularly to maximize their membership value. Strong Brand Loyalty and Customer Satisfaction: Costco enjoys high levels of customer loyalty, driven by the quality of its products (Kirkland and other brands), the value it offers, and the exclusive benefits of its membership model. Customer satisfaction is a key pillar that fuels repeat business.