Article | December 28, 2017

Buy In Bulk: The Retailers That Keep Thriving

Source: Riversand Technologies
Costco Store Front

Following our previous discussion on traditional retail brands and off-price retailers, another strong category of enterprises which managed to survive the latest disruptions are wholesale companies. These shops focus on selling goods in bulk to large families (and individuals) and small businesses. The most prominent examples are Costco, Sam’s Club, and PriceSmart. With smart investment in PIM solutions, all three were able to increase their revenue at a time of general market downturn.

Costco, the second largest retailer in the world after Walmart, has maintained its competitiveness by relying on active memberships, each of them with their unique perks, and selling the best brands in bulk at low-cost. The results have been better than expected in the last fiscal year. The company opened 29 new locations and net sales went up from $114 billion to $116 billion (2%).

Costco owes this success to their limited catalog of 3,700 distinct products (as opposed to Walmart which carries approximately 140,000). The wholesaler prefers not to carry multiple brands or varieties if the product is essentially the same, which results in substantial discounts for high-volume sales from vendors. Costco has also been running a very lean business and has drastically limited any costs in the past four years to approximately 10% of net sales (for selling, general and administrative expenses).