A New Year Brings New Challenges: A strategic look at Costco in 2012

CostcoHeading into 2012, Costco is well positioned not only to weather the storm of further economic downturns but also to consolidate its lead over other discount wholesalers like Wal-Mart and BJ’s Wholesale Club. Its intentionally low margin and exceptionally high inventory turnover, along with growing overseas sales and relatively low debt, are some of the main factors that point to Costco’s potential for continuing success.

The new year will also bring new challenges that the company must manage with careful strategy: increasing costs of products and labor; co-founder and CEO Jim Sinegal’s imminent retirement; and growing pressure to decide how and how quickly to expand both domestically and internationally. With its strengths and upcoming challenges in mind, we discuss a few of the key strategic decisions Costco must make, and explore how these choices might affect both its original business model and the changing retail industry in a volatile global economy.

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