Furthermore, the Costco model demands an ever-changing assortment of goods. Packaging is critical, in that it must be designed to drive the average ticket consistently higher. Costco and other club stores rely heavily on packaging strategy to squeeze out growth.

Costco also pulls value from their logistics. The company operates what they term depots, which are state of the art distribution facilities, which the company feels gives them a competitive advantage.

Costco has also focused on marketing and customer service as a way to derive value. One such program is a new extended warranty policy on electronic goods, the largest non-food segment of Costco's sales. Combined with a concierge service, this warranty has lowered the costs associated with product returns.

Related to both marketing and procurement, Costco has made use of strategic alliances to improve their bottom line. For example, in 2007 they developed a business supplies program to forge...
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