Thinking about investing in Costco Wholesale stock? Costco is one of America's largest retail groups. Read on for detailed information about its investment potential.
Costco Wholesale Corporation is an American discount store leader. The company has a successful business model, with sales continuing to grow year after year. Its share price has risen from $10 at the time of its IPO to $373.54 at the time of writing.
Is this compelling data a reason to invest in Costco Wholesale stock ? Read on for some important information about the company and its investment potential.
Costco Wholesale was formed by the merger of Costco (founded by Jim Sinegal and Jeffrey Brotman in 1983) and Price Club (founded by Sol Price in 1976) in 1993. The newly created company was named Price/Costco. In 1999, the name Costco Wholesale was adopted.
Currently, Costco has 558 stores in the United States, 103 in Canada, 39 in Mexico, 29 in the United Kingdom, 27 in Japan, 16 in South Korea, 14 in Taiwan, 12 in Australia, 3 in Spain, 1 in France, 1 in Iceland and 1 in China. It offers 3,500 items, 500 of which are exclusive products. Costco also has its own brand, the Kirkland Signature.
Costco Wholesale is a warehouse club, meaning that its customers are required to have a membership card. Currently, the membership fee is $60 per year in the US and 36 euros per year in France. In return, the store is committed to offering quality items at low prices to its customers.
Costco Wholesale's business model is based on economies of scale. It obtains large quantities of products and then sells them in bulk to a large number of customers. Its clientele is composed of individuals and professionals (grocers, retailers, restaurants, offices, convenience stores, etc.).
Costco also offers a concept called "treasure hunt", i.e 500 exclusive and exceptional products that are available in limited quantities. The products change constantly, unlike the other 3,000 items that are permanent.
The warehouse club also offers an online sales service with delivery service and e-commerce sites.
Costco Wholesale has a business model that differentiates it from other distribution stores. As a warehouse club, its subscribers are acquired customers. After all, when you have a card that allows you to buy quality products at low prices, it's hard not to use that card.
Costco also distinguishes itself by its aggressive pricing policy. Its prices are very competitive compared to those of its direct competitors, which include Walmart, The Kroger, Carrefour, and Amazon. By settling for lower margins, it can offer deals that are much cheaper than the retail price.
Costco's internationalization strategy is also noteworthy. As of April 2021, it has 804 stores, 246 of which are outside the United States. In France alone, it plans to build up to 15 new stores, including four to six, in the Paris region.
Finally, Costco is in the middle of developing its online sales section, boosted by the e-commerce boom that took place during the Covid-19 pandemic.
Costco Wholesale’s business model is based on American consumer habits. To shop in a Costco Wholesale store, you need a large freezer, refrigerator, closet for groceries and a big car for transportation.