31 Oct Unit 3_MT497_Team Discussion response
13758Respond or elaborate on the response below:
With a cost leadership operating strategy, Walmart is a titan in the big box retailer world. Operating more than 10,750 stores in 19 countries, it’s the largest retailer. (Yahoo) However, one competitor that could potentially impede on Walmart’s market share is Costco.
The threat of new entrants, within the Costco e-commerce market, does carry significant risk to Walmart market share. Costco has a business model for customer membership and online only order discounts. Both brands carry both the brick a mortar business plan, as well as bulk purchasing for supplier discounts, but Costco has more of the brand loyalty with its membership.
Costco also carries leverage in purchasing power. By using multiple suppliers to help drive cost competition, Costco can use bulk orders to attain additional discounts. Being able to change, or use multiple suppliers, for products gives Costco another advantage without threat of price increases and loss of margin with a specific supplier. (Daft) The biggest risk to both retailers would be a smaller retailer being closer to a specific market and offering an even better low-cost quality item.
Costco and Walmart do share the same risks with consumer buying power and substitute of products and goods. I shop at Costco, but I will still order from Amazon or shop at Target. As a consumer, I am cost and quality driven but also carry some brand loyalty. I will purchase my meat, toiletries, and snacks from Costco, and at the end of the year I have shopped enough to get a credit that pays for my annual membership. Target is where I will shop for seasonal items, clothing, food, and any odds or ends. Amazon is my go-to for any specialty item that Walmart doesn’t carry, and I’m too lazy to go to Target.
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