Case Study: Costco

When Costco opened in 1983, people assumed that because of its mundane decor and small selection of stock items, it would close its doors within a matter of years (Cottrell 37). Yet, little did they know, Costco’s innovative design and layout has been envied by retail businesses around the world because they offer items for a short period of time and often change their products. Today, Costco is the third leading retailer, according to the National Retail Federation, surpassing retail giants such as Target and Home Depot. Costco has successfully created a sense of urgency and offers a well designed layout, yet, its high costs of goods and services may limit the diversity of customers.
The shopping experience Costco has to offer is predominantly dependent on the layout the store. According to Gladwell, customer behavior is guided by how the products and the layout of the store is presented. The area entering the retail store is classified as the “Decompression Zone”, in which nothing of value should be placed (Gladwell). Interestingly enough, Costco appears to follow similar store layout to that suggested by Gladwell, but ironically places high cost products directly in front of the entrance and promotional items on the left.
Gladwell states in which a fundamental rule of retail shopping is that “the shopper invariably …show more content…
Typically, the demographic regions Costco locations are built tend to be in middle to higher income neighborhoods (Matos). A recent analyzation conducted by Brian Matos of the Chicago Now found that Costco’s surrounding neighborhoods’ “average income across all 12 zip codes [in Chicago] is $63,500 per person, per year” as opposed to the average income of $19,000 surrounding Walmart stores. Because Costco tends to targets higher income areas for its locations, this limits the availability and accessibility to a diverse group of