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Introduction: The Emergence of Costco

The 1980's saw the beginning of outlet saturation within the retail markets in the United States. It was fuelled by the increasing spending power of the average American and the need to Ð''stock up' and to. Shopping became a chore instead of a weekend activity. This resulted in the emergence big chain stores like Wal-Mart and K-Mart where most items that a household would need, were available under one roof, at low prices. This was followed by the introduction of fee based wholesale club stores like Price Club, Costco, BJ's and Sams Club (a subsidiary of Wal-Mart). In 1993, Price Club and Costco merged to form the biggest and the most recognized wholesale club, Costco Wholesale, with 100 warehouses. Shoppers could purchase anything from a can of mayonnaise to a $50,000 diamond ring under one roof. This was the culmination of the American need to be able to have access to everything at one place. Such rapid growth faced challenges like how to keep customers and employees happy. Costco focused on creating a healthy environment to work and pass on the joy to its members through its employees. Rapid growth is the need of every business, but it needs to be supported with effective communication with its employees and its customers. Corporations spend millions to achieve this goal through the means of advertising, but Costco took a fresh approach to tackle this beast and instead invested in its employees so that they could pass on the message to its members.

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This report looks at how Costco Wholesale has been communicating with its members through its employees. With this approach, they have been able to create a very strong brand presence in the market without spending a penny on advertising (Forbes, 2005). It helps the reader believe that a corporation can succeed the old-fashioned way, by earning respect for the product value it delivers and for its corporate values. We focus on how the company is setup, how it treats its employees and how it tackles the price competition. This report does not focus on external advertising practices but focuses on how it is beneficial to incorporate employees in the creation of a strong and trusted brand name.

Consumer Dissatisfaction with the Shopping Experience

As a result of the outlet saturation of the 1980's there was a outburst of retail outlets trying to gain