I'm there every other weekend, buying half-gallons of milk by the case and occasionally making lunch out of the samples at the end of every aisle. I ogle the oversized flat-screen TVs and tricked-out digital cameras that greet me at the entrance, and the smell of the bakery is enough to lure me past aisle after aisle of humidifiers, power drills, electric tea kettles, and Sinegal knows what else.
As a consumer, I love Costco
Rather than aiming for the impossible -- namely, controlling how often and how much members spend -- Costco should be striving to reach and attract more members. Unlike Target, which welcomes any Tom, Dick, or Harriet through its doors, Costco rakes in close to $2 billion a year on membership fees alone. (Rival Wal-Mart
Bookmark costco.com: You want more visitors, more frequently? Leverage costco.com, one of the only virtual warehouses that comes anywhere near the variety you'll find at Amazon.com
. As a 13-year member of Costco, I've never made a single purchase at costco.com -- but I'm in the store more frequently than the average member's 11 visits per year (and spend more than the average $94 per visit, too). By more tightly integrating store membership with online offerings, Jelinek could woo members like me to the site in between visits, possibly upping my monthly spending -- and certainly boosting my "visits" to the realm of Costco. (Nasdaq: AMZN)
Stay home: Lest the online strategy chip away at the warehouse-and-membership model that has brought Costco this far, Jelinek and Co. need to home in on scouting out domestic store locations, putting international expansion plans on the back burner. Between the physical footprint of each warehouse and the physical bulk of the items people purchase at Costco stores, this company's concept may just be too big for European and Asian countries, whose residents often rely on public or mini-sized transportation and live in modest spaces that can't store a year's supply of paper towels. Stay close to home, where the concept of buying big at big value is ingrained in the culture. One of the potentially most promising markets for bulk retailers, Latin America, is already being dutifully served by a company that's cut from Costco's fabric, PriceSmart
. Trying to expand in this market would not only mean competing with PriceSmart, but repatriating money to a strengthening greenback. Costco should stay close to home for now. (Nasdaq: PSMT)
- Promote the brand: It may seem like everyone has heard of Costco, but the company has no official advertising strategy beyond targeted home mailings. A business this size could quickly become a top Google hit by spending the equivalent of pocket change on online advertising, a tactic that aligns with enhancing costco.com's clout.
Even a behemoth like Costco has to realize it can't control members' footsteps through the door or the number of bills they take out of their wallet each time. Yet that's exactly what the company intends to do, as outlined in the 10-K. Jelinek has a chance to chart a new course here -- and while turning a ship this size even a single degree takes a lot of muscle, the new CEO could be just the person to flex it.
Costco has been fortunate enough to weather the changing retail storm, and it's even been named one of our Real Cash Kings Changing the Face of Retail. To uncover the other company that is disrupting the very landscape of retail as we know it, you can access the special free report by clicking here.
Kate Herman has a freezer full of high-quality, low-cost meats and more mini sweet peppers in her fridge than she'll ever need, but she owns no stocks mentioned in this article.
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