468 Retail and Channel Management Blog

Thursday, February 9, 2012

Are You A Member?


            One of my childhood memories included going grocery shopping every weekend with my mom to pick out my lunches and snacks for the week. But what I looked forward to most was ending off the day off with a Costco hot dog and fries. That is the power of private labeling. I could only get the hotdog and fries specifically at Costco which created the urge to go every week as a kid. Not only did it taste amazing, but the cost was only a couple dollars for a hotdog and a drink. It became a weekly ritual.

            Costco is the sixth largest retailer and the biggest membership retailer in the Unites States. Costco was published in the “2011 Temkin Experience Ratings” in which it was compared to 27 other retailers in regards to customer experience. The customer experience was rated upon three elements which included functional, accessible, and emotional factors. Costco became third in the Temkin Experience Ratings. 

Why do members have such a great experience at Costco? First, is that Costco is a retailing giant that offers a diversified product line and many services to its members. Costco is a warehouse where you can almost find anything from household goods, electronics, jewelry, office supplies, and many more. Costco’s aim is to increase customer experience buy putting confidence in the members that the products that they purchase at Costco is at high quality and a fair price. Second is the service that Costco offers. Costco has a pharmacy, optical care, digital photography, a restaurant, and even a private gas station providing cheaper fuel to all its members. Lastly, I would like to talk about the great customer service that Costco provides. Personally, I hate the process of going through exchanges and refunds because it’s such a stressful process of waiting in line, explaining the problem, checking the receipt and product, and sometimes waiting for manager approval. At Costco I always had a positive experience in which, the refund process was very simple and fast. I would also like to add the free samples that are given throughout the whole warehouse always creates positive shopping experience. Who doesn’t like the free samples at Costco? They are free and so good.

Kirkland Signature is Costco’s private label that was introduced in 1995. Kirkland Signature has over 300 products which will estimate about to ten percent of all products in Costco. Why is Costco’s private label so successful? “Kirkland Signature brand aims to be as good—and cheaper—than leading manufacturer brands, delivering greater brand value to Costco members.” What makes Costco separate from other retailers is that members must pay an annual membership fee in order to purchase items in Costco. As a result, for consumers to purchase Kirkland Signature products they first must attain a Costco membership. Our family being a Costco member for a long time accumulated many household goods that are all “Kirkland Signature.” These items include, paper towels, bottled water, cashew nights, calcium pills, and the list goes on. In 2010, Kirkland Signature produced 24% of Costco sales and “the goal continues to increase the company’s store brand share to 37 percent.

In Conclusion, Costco continues to prove that they are a top competitor in the retail industry. More stores are opening, sales are going up, and most importantly continuing to provide great service to all its members.



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