Costco Wholesale (COST)

Increasing the number of clubs may cause cannibalization of sales at already existing clubs, instead of allowing Costco to take more market share from competitors like Sam's Club and BJs.

The context of the company's margins and employee policy needs to be explained a little better. Costco's entire business model is predicated on low margins and high volume, and the company's high employee cost is favorable as it creates low turnover, attracts better qualified employees, and lowers the probability of legal action by employees. Also, the company's ability to raise membership fees annually for the past 5 years is favorable, as it suggests higher bargaining power over the company's buyers. Author who provided this claim about membership fees needs to provide statistics showing prices increasing, while membership dropping off substantially.

Costco has had consistently low profit margins in past years, and Costco's ability to increase margins is limited by its high employee cost.

Costco has been raising membership fees annually for the past 5 years. Since Costco heavily relies on renewed and new memberships, increased fees may drive consumers to competing warehouse clubs.