Message Font: Serif | Sans-Serif
No. of Recommendations: 3

During the holiday season, most successful retailers see an overall boost in sales and revenue due to increased consumer spending. One could assume that a retailer that did not adhere to this trend would probably be struggling, because during this time period many retailers can generate up to 30% of their annual revenue. However, this is not the case at all when it comes to Costco (COST). Costco operates differently than most retailers, but still finds itself outdoing competitors. Costco's different business approach is perhaps what makes it an appealing buying target over traditional retailers such as Wal-Mart (WMT), Target (TGT), and Dollar General (DG).

During the holiday season, Costco only generates about 18% of its annual revenue, while most retailers generate close to double that amount. How does Costco keep up with these other companies? Costco provides a substantially lower price (about 10% lower than most retailers) on many of its goods year-round, so customers are more likely to purchase items from it rather than other retailers. This strategy allows Costco the flexibility to not have to be open on the holidays, and to give their employees those days off. This strategy is the opposite of other retail giants that try to attract the biggest crowds possible during the holiday seasons (e.g., Wal-Mart). We have all seen the problems occurring with other retailers and their employees feeling mistreated. Perhaps Costco has it right with its business model of treating its employees well and offering higher wages and more benefits.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.