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  •  Costco competes directly for WalMart customers (3+ / 0-)
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    elfling, Cassandra Waites, Aunt Pat

    like myself. Where there is a Costco, the majority of my consumer spending occurs there. If there is no Costco, then I go to WalMart and Sam's club, both, and they "split" that money (if you want to see it that way when they are the same company).

    Costco competes with Walmart (and other stores) in another way. Once people have shopped at Costco, they are no longer willing to pay the premium other stores were able to charge before they came. Who pays a dollar for a lighter when Costco sells the same lighter 50 for $8.49? Changed consumer expectations caused the price of nearly everything on the island to drop by a third in a matter of months when Costco came to town. Even for things Costco doesn't sell - companies reduced their margins so they could compete.

    The effect of Costco is still obvious when you shop the same store on opposite sides of the island. A WalMart in Hilo, nearly two hours away from Costco, can charge more than a WalMart in Kona with a Costco just down the street.

    Yes, the business model is different. Costco sells high volume, low margin products while WalMart sells high volume, high margin products. But to say that they don't directly compete in a big way is absurd.

    •  In this area (1+ / 0-)
      Recommended by:

      Wal-Mart has bought property directly across the street from Costco and 2 miles from Fred Myer.

      Wal-Mart has had the property for well over a year and no construction has begun. They ran into zoning problems and that took a long while for them to fix.

      I'll believe it when I see it.

      "I saw the best minds of my generation destroyed by madness," Allen Ginsberg

      by Hermenutic on Tue Feb 11, 2014 at 07:18:15 PM PST

      [ Parent ]

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