Page 435 - Foundations of Marketing

402 Part 5 | Distribution Decisions

Going Green

Costco Seeks Sustainability through Improved Processes and Products

Costco is going green in a big way, putting the market- commodity or relies upon a limited resource for its
ing power of its 600 warehouse stores and $ 87 billion in production,” explains a Costco manager. For example,
annual sales behind a multiyear sustainability strategy. the company worked with Ugandan farmers to improve
First, the retailer is looking at the eco-impact of its stores. the way they grow and harvest high-quality vanilla pods.
In addition to overhauling chilling units and air-condi- Once the vanilla is cured and processed, it is sold under
tioning systems to eliminate environmentally unfriendly Costco’s Kirkland label as a baking ingredient and is mixed
refrigerants, it has installed solar panels in dozens of into other Kirkland products, such as vanilla ice cream.
U.S. stores to generate clean energy. Its new stores are Finally, Costco has teamed up with manufacturers
designed to be energy-efficient and constructed with a mix like Seventh Generation and ConAgra to test new labels
of new and recycled materials. that will clearly indicate which product packages can be
Just as important, the retailer is increasing its mix recycled. The goal is to educate customers about what to
of sustainable private-brand products, particularly in the recycle and where, another key aspect of Costco’s sustain-
food department, where “everything is a limited resource ability strategy.
a

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wide enough for forklifts. Merchandise is stacked on pallets or displayed on pipe racks. Cus-
tomers must perform some marketing functions, like transportation of purchases, themselves.
Warehouse clubs appeal to price-conscious consumers and small retailers unable to obtain
wholesaling services from large distributors.

Warehouse Showrooms
Warehouse showrooms are retail facilities with five basic characteristics: large, low-cost
buildings, warehouse materials-handling technology, vertical merchandise displays, large
on-premises inventories, and minimal services. IKEA, a Swedish company, sells furniture,
household goods, and kitchen accessories in warehouse showrooms and through catalogs.
These high-volume, low-overhead operations offer few services and few personnel. Lower
costs are possible because some marketing functions have been shifted to consumers, who
must transport, finance, and perhaps store products. Most consumers carry away purchases in
the manufacturer’s carton, although stores will deliver for a fee.

Specialty Retailers

In contrast to general-merchandise retailers with their broad product mixes, specialty retailers
emphasize narrow and deep assortments. Despite their name, specialty retailers do not sell
specialty items (except when specialty goods complement the overall product mix). Instead,
they offer substantial assortments in a few product lines. We examine three types of specialty
retailers: traditional specialty retailers, category killers, and off-price retailers.
warehouse showrooms Retail
facilities in large, low-cost Traditional Specialty Retailers
buildings with large,
on-premises inventories and Traditional specialty retailers are stores that carry a narrow product mix with deep product
minimal services lines. Sometimes called limited-line retailers, they may be referred to as single-line retailers
traditional specialty retailers if they carry unusual depth in one product category. Specialty retailers commonly sell such
Stores that carry a narrow shopping products as apparel, jewelry, sporting goods, fabrics, computers, and pet supplies.
product mix with deep product The Limited, Gap, and Foot Locker are examples of retailers offering limited product lines but
lines great depth within those lines.

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