Question

What do we have in common or not?

Costco:
Costco has a much smaller customer base as compared to Walmart, this is due to the Membership component of shopping at Costco which Walmart does not have. In 2020 Costco reported 90%+ renewal rate of existing customers. This is not only due to the fact they provide low prices, good customer service and strong product offering, but it is also due to the investment Costco makes in terms of employee retention, pay, and employee training.

Costco prides itself on paying its employees better than other retailers. This assists in ensuring that Costco keeps highly motivated staff. The happy staff leads to higher standards as well as a better overall customer experience for Costco shoppers. This customer satisfaction is reflected in the renewal rate I mentioned earlier.

In addition, Costco has always target a relatively higher HHI as well as college -educated consumer. Early on, Costco focused on targeting business owners, hospitals, banks. They soon opened up to the general public but still targeted this higher end consumer that they felt understood the value of the membership.

Overall, Costco is not concerned about rapid growth or expansion, but more happy staff, customers and providing an overall good experience foe people that interact with the brand

Walmart:
Walmart is a growth monster in the big-box retail world with over 11,500 stores in 27 countries. Unlike Costco, Walmart has thrived on aggressive expansion completely open to the public. Walmart owns Sam’s Club which does have a membership component. Despite being a membership shopping model Sam’s Club still caters to a lower income market as compared to Costco.

Walmart coined the phrase Everyday Low Price (EDLP) with the early slogan of “Always low prices” which has since changed to “Save Money. Live Better”. This positioning drives huge numbers of customer from the low-middle income populations.

The reason Walmart has been able to provide EDLPs is due to the fact the eliminate the middleman for their product supply in most cases. This allows then to offer the lowest prices, for the same products sold at other stores to its customers. Walmart maintains an impressive fleet of its own delivery trucks with also assists in the most efficient supply chain.

Overall, Walmart has created an infrastructure to allow for growth and the lowest prices which its target market will continue to expect.

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About Costco :

Membership Fee for Purchasing of goods. Consumers are not Subscribing for Goods, but actually they are subscribing for Services.
They are selling at less margins to maintain Capped Margins.
Maximum, on all products the average margin in an year is 11-12%
For maintaining average margin, they have their own brands, where in that brands the margins are much higher than their average margin.
These higher margins of own brands will be compensated with lower margins of other brands to maintain average margin.
They don't offer lower prices only on weekends or on some other days, they continuously offer discounts throughout the year on most of the products.
High Employee wages - This allows employees to do more productive work rather than lazy.
Fewer Stock Keeping units - They have only limits brands in all segments, say only one or two brands in toothpaste. This allows them to gain higher margin as the brand-owners wants their product to be in store.
About Walmart:

Targeted both Wholesale and Retail Consumers.
They are using technology in a better way. This allows them for online sales high when compared with Costco.
Everyday Low prices - Mostly all the time they are offering discounts.
Large sales volume made possible by a large customer base and scale of operation.
They have divided the stores into categories based on the size and prices - Super-centers, Discount Stores, Neighborhood Markets
A highly efficient supply chain system that maximizes productivity and reduces outlays. They have their own logistics which includes Tractors, Trailers and own drivers. This allows them to reduce costs of Transportation, on-time delivery of products.
Low operational and overhead costs - When compared with Costco, the employees salaries are less in Walmart. Their overhead costs are also less as they have their own Logistics facility and mostly they are doing business online also.
International Presence is an added advantage to Walmart .

Answer 1

COMMON PRACTICE BETWEEN COSTCO AND WALMART:

1.LOWER PRICES:Costco offers lower prices not only on weekends or on special occasions instead they offer continue discounts throughout the year on most of the products which leads to higher sales of Costco.

Same is in the case of Walmart as they offer low prices on a daily basis by mostly offering discounts all the time. Even they have considered the discount store on the basis of size and price.

2.PRODUCTIVITY:As Costco pays employees wages on a higher basis to do more productive work which leads to increase in productivity.

As Walmart have divided the stores into categories based on the size and prices - Super-centers, Discount Stores, Neighborhood Markets which leads to increase in productivity as highly efficient supply chain is maintained.

3.QUALITY PRODUCT:In 2020 Costco reported 90%+ renewal rate of existing customers which is also due to one of the factor like strong product offering or Quality Product

Walmart is a growth monster in the big-box retail world due to one of the features offering good quality product and on time delivery of products.

4.CUSTOMER SERVICE:In Costco ''Consumers are not Subscribing for Goods, but actually they are subscribing for Services''. This customer satisfaction is reflected in the renewal rate which is 90%+ renewal rate of existing customers which reflects better customer service

In Walmart Customers have an option of online sales and in offline sales they have divided the stores into categories based on the size and prices - Super-centers, Discount Stores, Neighborhood Markets. They are delivering the products on time as they have their own logistics facility which reflects better customer service.

NOT COMMON OR UNCOMMON PRACTICE BETWEEN COSTCO AND WALMART:

1. WAGES/SALARIES:In Costco Employees wages are high which leads to more productive work by them whereas in Walmart Employees salaries are less as they are doing online business and they have their own logistics facility.

2.ONLINE/OFFLINE BUSINESS:In Costco the business operate only on offline basis whereas in Walmart the business operates on both offline and online basis.

3. TARGET CUSTOMERS:COSTCO always target college educated consumer and earlierhe used to target business owners, hospitals, banks whereas WALMARTS target all consumers whether they are Wholesale or Retail Consumers.

4. INTERNATIONAL PRESENCE:In COSTCO there is no international presence whereas WALMART enjoys the benefit or advantage of International Presence.

PLEASE UPVOTE IF THE ANSWER WAS HELPFUL.