What Determines Greatness in Retail?
The Factors that Make Costco and Walmart the Best Players in Retail
Both the past and present has brought numerous changes and challenges for the retail sector. The only brands that weathered through the storms over the years are the ones with strong business values. For example, look at Costco and Walmart. Most of the counterparts in their industry caved to the pressure.
What made Costco and Walmart different? What made them stronger?
It was a solid foundation.
Clients Come First
Costco and Walmart put their clients first. On the first shopping trip to their store, they are considered a consumer. They are customers if they continue to return and shop there. Costco and Walmart had a large group of “customers” while retailers like Target and Kmart had a lot of “consumers.”
Costco and Walmart did not need to spend a lot on advertisements and promotions, they were successful through word-of-mouth. Loyal customers were a result of quality products, variety and affordability.
Spent Less on Advertising
Costco and Walmart gain their customer loyalty through building confidence. It was Sam Walton, the founder of Walmart, who believed that when shoppers visited by their own choice without expensive advertising, business would certainly grow. Walton did not agree with luring shoppers with discounts and pricy endorsements because it would only benefit Walmart in the short term.
In 2013, Costco and Walmart spent far less on advertising than retailers like Amazon, JC Penney and Kohl’s. In 2013, Walmart spent less than 1% of their revenue on advertising. Likewise in 2013, Costco spent nothing on advertising. Instead, Costco relies on referrals.
Costco and Walmart are successful because they know how to set priorities. By staying true to their business values, they were able to weather the storm over the years and ward of competition. Through quality product at a reasonable price, they are able to cater to customers. Costco and Walmart know what it takes to achieve greatness.
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