minimum of one page typed single spaced of recommendations for the 6 issues listed belowthese are the issues- Lack of online presence. While Costco claims online presence to be part of its retail strategy, Costco is not known for having an omnichannel experience, with net sales for Costcos online business being only 4% of total net sales in 2017. Costcos consumers are increasingly relying on mobile phones, tablets, and computers for shopping so Costcos continued relevance depends on developing timely member-facing technology.
Bulk buying model. While buying in bulk is cheaper, many customers do not want to purchase high quantities of a product at a time due to space constraints or perishability of goods. Additionally, Costco offers an extensive amount of merchandise but a relatively narrow array of product options. Customers may choose to go to competitors that have more options such as Walmart.
Dependence on Kirkland Signature brand. Costcos private label brand is essential in developing and maintaining customer loyalty. Kirkland Signature products have a higher profit margin, and if customers have a loss of consumer trust in the brand, Costcos profit margins would be severely affected.
Membership model. Costco is dependent on a membership model, which encourages shoppers to buy more at their store, but if customers choose not to renew their membership Costcos overall sales would be strongly affected. Costco is reliant on increasing the number of executive memberships and sustaining high renewal rates to continue profitability.
Consumer preference. Costcos business model is very dependent on having a high volume of sales since profit margins are so slim. If consumer preferences change, Costco will have a large amount of unpurchased merchandise. Costcos success depends on its ability to identify trends and changing consumer tastes, so predicting sales trends to determine inventory and pricing is crucial to predicting consumer preference. Heavily dependent on U.S. and Canadian operations. While Costco has locations on 4 continents, they heavily rely on the performance of U.S. and Canadian operations, which comprised 87% and 85% of net sales and operating income in 2017.
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