Costco Media Brief

Running head: MEDIA PLANNING–MEDIA BRIEF PART 01

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Student Information Client Name: JKL Company Product/Brand: Costco Group members: (Kay)Wing Man Liu, Joshua Jafri, & Junseo Lee Instructor’s name: Colin Robey Category/Brand Research Category ● Category issues -

Canadians tend to seek value when shopping, especially when grocery shopping, due to slow raises in salaries. Warehouse clubs, especially Costco, offer what are seen as highquality products for excellent prices, leading them to highly benefit from this trend (Euromonitor International, 2019, p.1).

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The top five reasons consumers choose a specific grocery store to shop are: Lowest prices (64.3%), distance from home (63.2%), the availability of desired products (55.5%), has a loyalty program (49.3%), and convenience of shopping (49.0%) (Statista, 2019). [Place OOH ads in places that are near to a Costco location, because proximity is one of the highest factors in choosing a grocery store to shop at.]

● Market size and forecasted growth Table 1: Warehouse Clubs GBN Brand Shares: % Value 2015-2018 % retail value rsp excel sales tax Company Brand

Company (GBO)

2015

2016

2017

2018

Costco

Costco Wholesale Corp

72.3%

73.6%

75.0%

75.7%

Wholesale Club

George Weston Ltd

27.7%

26.4%

25.0%

24.3%

Total

100.0% 100.0% 100.0% 100.0%

Euromonitor International (2019, February). Warehouse Clubs in Canada, Country Report

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Costco Wholesale Corp had the most market share by a large margin in the Canadian warehouse clubs’ market, with 75.7% of the market share in 2018. Costco Wholesale Corp

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steadily gained around 1.3 share points yearly from 2015 to 2017, and gained 0.7 share points in 2018, totaling an increase of 3.4 share points from 2015 to 2018 (Euromonitor International, 2019, p.1).

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George Weston Ltd is the second and only other company in the Canadian warehouse clubs’ market, with a market share of 24.3% as of 2018. The company has experienced a decrease of 3.4 share points from 2015 to 2018. George Weston Ltd steadily lost approximately 1.3 share points yearly from 2015 to 2017, however, they only lost 0.7 share points in 2018 (Euromonitor International, 2019, p.1).

Table 2: Warehouse Clubs Forecasts: Value Sales, Outlets and Selling Space 2018-2023 2018 Value sales CAD million Outlets Selling Space '000 sq m

2019

2020

2021

2022

2023

$19,289.10 $19,487.80 $19,932.10 $20,727.40 $21,419.70 $22,064.40 157

157

159

159

159

160

1,929

1,929

1,940

1,951

1,951

2,000

Euromonitor International (2019, February). Warehouse Clubs in Canada, Country Report

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The value sales of the warehousing club market totaled nearly $19.29 CAD million in 2018.

It is predicted to rise at increasing rates, starting at 1.0% in 2019 to nearly 4.0% in 2021.

However, in 2022 and 2023, the rate of increase is predicted to begin to slow, increasing by only 3.0% in 2023, which is when the value sales are predicted to be over $22.06 CAD million (Euromonitor International, 2019, p.1).

● Recent (past 5 years) innovations in the industry -

In the past summer, Costco created a digital membership card, which can be accessed and used through their smartphone application (Wida, 2019). In doing so, the company made it easier for consumers to shop at any of the company’s locations, as consumers would not have to worry about carrying or forgetting a physical membership card.

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● Prospects for the category -

Warehouse clubs do not attract millennial consumers, as this audience does not like the idea of an annual membership fee, nor do they often need to purchase goods in large quantities. Additionally, online shopping can be much more attractive to this audience due to its incredible convenience. Due to these reasons, warehouse clubs may face the problem of obtaining newer, younger customers, which is a concern due to their current customers consisting of an older demographic (Euromonitor International, 2019, p.1). [Do not target ads toward millennials, because they will be less receptive to the ad.]

● Online – use of online by the category -

Warehouse clubs take advantage of being online for multiple purposes. They advertise products, showcase sales, and offer information about the warehouse club itself. They also let consumers register or renew their memberships online (Costco Wholesale, 2019).

● Major industry news -

The present value of the warehouse club in 2018 increased by 4.0% to CAD$19.30 billion (Euromonitor International, 2019, p.1).

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The expected compound annual growth rate of the warehouse clubs is 5.0% (calculated as 3.0% at 2018 constant price) and will reach CAD$24.40 billion by 2023 (Euromonitor International, 2019, p.1).

Company/Brand ● Analysis of social media used by the company/brand -

Big-box retailers are more affected by offline word-of-mouth than social media. Costco's offline performance is particularly strong. Positive store experience, price, and quality are important for offline conversations (Engagement labs, 2017, Para. 3). Although Costco does not put much effort into social media, they created an Instagram account in 2016. This account highlights the best deals on health foods and household items. Consumers can add to their shopping lists through a feed from this account (Quinn, 2018, para. 7).

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● Recent (past five years) advertising activity by the company/brand -

Costco in the USA has no advertising budget. The company does not make most of their profit from selling goods. Their gross margin is lower than other brands. The annual costs of Costco's membership make up most of their operating profits (Investopedia, 2019, para.

3-4).

● Recent (past five years) launch of new products/line extensions -

Costco’s private label products are considered high-quality products (Euromonitor International, 2019, p.3). Costco has sourced and formulated new products, co-branded with international brands, and partnered with international manufacturers to create low price and high-quality Kirkland Signature. New products were introduced in the magazine The Costco Connection (Costco Wholesale, n.d., para. 1). [Place ads in mediums that can take advantage of the product being considered high quality, such as relevant magazines.]

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Costco's Kirkland Signature launched a new frozen tilapia in early 2016. Kirkland Signature Tilapia grows without antibiotics, in clean water, and at a constant temperature.

Due to these characteristics, this product was promoted for New Year's healthy diet (The Costco Connection, 2016, p. 59).

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In the summer of 2015, Kirkland launched the Kirkland Signature Organic Lemonade. This product contains high quality organic lemon juice (The Costco Connection, 2015, p. 59).

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Another product was launched in 2015. Kirkland Signature Lunch Meat has three options of meat for sandwiches. This product is low in sodium and made from natural ingredients (The Costco Connection, 2015, p. 63).

● Analysis of business model used by the company/brand -

Costco operates on a subscription business model. Customers who want to buy goods at Costco must sign up and pay for membership. Costco rewards customers by lowering commodity prices (Investopedia, 2018, para. 3). Consumers try to justify membership costs by shopping more and buying more products when they shop (Clifford, 2019, para. 9).

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● Community involvement -

Costco tries to contribute to the community. The company especially contributes to children's health, education, and families in need. The United Way, Breakfast Club of Canada and Children's Miracle Network have all been designated as major charities (Costco Wholesale, n.d., para 1). Costco's Charitable Contributions Committee oversees charitable contributions and aims to keep activities balanced, with a focus on where the company’s employees and members live (Costco Wholesale, n.d., para. 2). [Place ads in local areas where the company contributes to the community, using mediums that can target specific areas, such as community newspapers.]

Current Users – Demographics

Category Information I. Age Medium/Heavy Food Shopping- 2+ Times HH Shops/Avg Week Age 13/14-17

CND POP%

Users %

Index

7.0

0.8

12

18-24

10.6

6.0

56

25-29

6.2

5.7

92

30-34

9.8

9.7

99

35-39

7.0

7.2

102

40-44

7.8

8.6

109

45-49

8.0

9.1

113

50-54

8.2

9.3

113

55-59

8.4

10.2

122

60-64

7.7

9.9

129

65-69

8.8

10.9

125

10.2

12.7

124

70+

Source: VIVIDATA 2018 2-Year Readership Study. Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week

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Current Users Age Total Vertical % Index - At least...

50+

53.0% 13.0% more likely

Point #1 Canadians ages 50+ account for 53.0% of medium to heavy food shoppers. They are at least 13.0% more likely to be medium to heavy food shoppers (Vividata, 2018).

Point #2 Medium to heavy food shoppers between ages 60-64 are 29.0% more likely to be medium to heavy food shoppers and account for 9.9% of medium to heavy food shoppers (Vividata, 2018).

II. HHI Medium/Heavy Food Shopping- 2+ Times HH Shops/Avg Week HHI

CND POP%

< $25,000

Users %

Index

12.4

12.7

102

$25,000- $34,999

8.9

9.6

107

$35,000- $49,999

12.5

12.8

102

$50,000- $74,999

19.5

19.9

102

$75,000- $99,999

14.5

14.0

97

$100,000- $124,999

12.4

12.5

100

$125,000- $149,999

7.5

7.5

100

$150,000- $199,999

6.9

6.8

99

HHI $200,000+

5.4

4.4

81

Source: VIVIDATA 2018 2-Year Readership Study. Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week

Current Users HHI Under $75,000

Total Vertical % Index - At least...

55.0%

2.0% more likely

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Point #1 Canadians with a household income of under $75,000.00 account for 55.0% of medium to heavy food shoppers. They are at least 2.0% more likely to be medium to heavy food shoppers (Vividata, 2018).

Point #2 Medium to heavy food shoppers with a household income between $25,000.00 - $34,999.00 are 7.0% more likely to be medium to heavy food shoppers and account for 9.6% of medium to heavy food shoppers (Vividata, 2018).

III. Gender Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week Gender

CND POP%

Users %

Index

Male

49.5

41.5

84

Female

50.5

58.5

116

Source: VIVIDATA 2018 2-Year Readership Study. Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week

Current Users Gender Female (Adults)

Total Vertical Index - At least...

58.5% 16.0% more likely

Point #1 58.5% of medium to heavy food shoppers are female (Vividata, 2018).

Point #2 Female Canadians are 16.0% more likely to be medium to heavy food shoppers.

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IV. Education Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week Education

CND POP% Users % Index

No Certificate / Diploma

14.3

7.3

51

Secondary / High School Graduate

18.3

17.6

96

University / Other Non-University Cert.

24.7

28.6

116

Bachelor's Degree

18.5

20.0

108

Post Graduate+ Degree

13.1

14.1

108

Source: VIVIDATA 2018 2-Year Readership Study. Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week

Current User Education University / Other Non-University certificate or above

Total Vertical % Index - At least...

62.7%

8.0% more likely

Source: VIVIDATA 2018 2-Year Readership Study. Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week

Point #1 Canadians with a University/Other Non-University certificate or above account for 62.7% of medium to heavy food shoppers. They are at least 8.0% more likely to be medium to heavy food shoppers (Vividata, 2018).

Point #2 Medium to heavy food shoppers who have a University/Other Non-University certificate are 16.0% more likely to be medium to heavy food shoppers and account for 28.6% of medium to heavy food shoppers (Vividata, 2018).

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V. HH Status - HH Structure Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week HH Status - HH Structure

CND POP% Users % Index

Couple with Children Living at Home

43.0

41.1

96

Couple-No Children Living at Home

21.0

24.9

118

Adult with Children Living at Home

7.7

7.5

99

12.2

15.6

127

9.0

7.1

79

16.5

21.1

128

7.1

3.8

53

Adult Living Alone Adult Sharing Accommodation Empty Nesters Other

Source: VIVIDATA 2018 2-Year Readership Study. Medium/Heavy Food Shopping-2+ Times HH Shops/Avg Week

Current Users HH Status - HH Structure - Couple-No Children Living at Home - Adult Living Alone - Empty Nesters

Total Vertical % Index - At least...

61.6%

18% more likely

Point #1 Couples with no children living at home, adults living alone, and empty nesters account for 61.6% of medium to heavy food shoppers. They are at least 18.0% more likely to be medium to heavy food shoppers (Vividata, 2018).

Point #2 Medium to heavy food shoppers who are empty nesters are 28.0% more likely to be medium to heavy food shoppers and account for 21.1% of medium to heavy food shoppers (Vividata, 2018).

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Brand-specific information I. Age Groceries - Food Shopping - Stores HH Shops At (National) Costco - Most Often Age

CND POP%

13/14-17

Users %

Index

7.0

2.0

36

18-24

10.6

4.7

44

25-29

6.2

7.2

111

30-34

9.8

11.5

117

35-39

7.0

9.4

133

40-44

7.8

10.8

137

45-49

8.0

11.7

147

50-54

8.2

10.0

123

55-59

8.4

9.2

108

60-64

7.7

6.4

79

65-69

8.8

9.5

107

10.2

7.5

71

70+

Source: VIVIDATA 2018 2-Year Readership Study. Groceries - Food Shopping/ Costco

Current User Age

Total Vertical % Index - At least...

30-54

53.4% 17.0% more likely

Point #1 Canadians ages 30-54 account for 53.4% of people who shop at Costco most often. They are at least 17.0% more likely to shop at Costco the most (Vividata, 2018).

Point #2 Canadians ages 45-49 are 47.0% more likely to shop at Costco most often and account for 11.7% of those who shop at Costco most often (Vividata, 2018).

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II. HHI Groceries - Food Shopping - Stores HH Shops At (National)Costco - Most Often HHI

CND POP%

< $25,000

Users %

Index

12.4

8.8

70

8.9

10.0

112

$35,000- $49,999

12.5

10.9

88

$50,000- $74,999

19.5

19.7

101

$75,000- $99,999

14.5

14.4

97

$100,000- $124,999

12.4

15.3

122

$125,000- $149,999

7.5

8.3

116

$150,000- $199,999

6.9

6.4

98

HHI $200,000+

5.4

6.1

116

$25,000.00- $34,999

Source: VIVIDATA 2018 2-Year Readership Study. Groceries - Food Shopping/ Costco

Current User HHI $50,000.00 - $149,999

Total Vertical % Index - At least...

57.7%

N/A

Point #1 Canadians with a household income between $50,000.00 - $149,999.00 account for 57.7% of those who shop at Costco most often (Vividata, 2018).

Point #2 People with a household income of $100,000.00 - $124,999.00 are 22.0% more likely to shop at Costco most often and account for 15.3.0% of those who shop at Costco most often (Vividata, 2018).

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III. Gender Groceries - Food Shopping - Stores HH Shops At (National) Costco - Most Often Gender

CND POP%

Users %

Index

Male

49.5

37.7

76

Female

50.5

62.3

123

Source: VIVIDATA 2018 2-Year Readership Study. Groceries - Food Shopping/ Costco

Current User Gender Total Vertical % Index - At least...

Female

62.3%

23% more likely

Point #1 Canadian females account for 62.3% of people who shop at Costco most often (Vividata, 2018).

Point #2 Canadian females are 23.0% more likely to shop at Costco most often (Vividata, 2018).

IV. Education Groceries - Food Shopping - Stores HH Shops At (National) Costco - Most Often Education

CND POP%

Users %

Index

No Certificate / Diploma

14.3

7.1

56

Secondary / High School Graduate

18.3

17.5

92.9

University / Other Non-University Cert.

24.7

26.7

107

Bachelor's Degree

18.5

19.9

108

Post Graduate+ Degree

13.1

15.3

114

Source: VIVIDATA 2018 2-Year Readership Study. Groceries - Food Shopping/ Costco

Current User Education University / Other Non-University certificate or above

Total Vertical % Index - At least...

61.9%

7.0% more likely

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Point #1 Canadians who have a University / Other Non-University certificate or above account for 61.9% of people who shop at Costco often. They are at least 7.0% more likely to shop at Costco most often (Vividata, 2018).

Point #2 People who have a Post Graduate+ Degree are 14.0% more likely to shop at Costco most often and account for 15.3% of those who shop at Costco most often (Vividata, 2018).

V. HH Status - HH Structure Groceries - Food Shopping - Stores HH Shops At (National) Costco - Most Often HH Status - HH Structure

CND POP%

Users %

Index

Couple with Children Living at Home

43.0

56.4

133

Couple-No Children Living At Home

21.0

22.6

107

Adult with Children Living At Home

7.7

5.5

71

12.2

8.8

70

9.0

4.4

48

16.5

14.4

96

7.1

2.3

33

Adult Living Alone Adult Sharing Accommodation Empty Nesters Other Source: VIVIDATA 2018 2-Year Readership Study. Groceries - Food Shopping/ Costco

Current User HH Status - HH Structure Couples with or without Children Living at Home

Total Vertical % Index - At least...

79.0%

7.0% more likely

Point #1 Couples with or without children living at home account for 79.0% of people who shop at Costco most often. They are at least 7.0% more likely to shop at Costco most often (Vividata, 2018).

Point #2 Couples with children living at home are 33.0% more likely to shop at Costco most often and account for 56.4% of those who shop at Costco most often (Vividata, 2018).

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Other information for current users Having to pay for membership and products being in bulk quantities are both features that are not attractive to millennials. Additionally, shopping online is becoming increasingly popular for this audience. Therefore, current users include slightly older demographics, but specifically exclude millennials (Euromonitor International, 2019, p.1).

Summary of the current users The current users are women in couples with or without children, ages 30 - 54, with a household income between $50,000.00 - $149,999.00.

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References Clifford, C. (2019). How to Costco uses $5 rotisserie chickens and free samples to turn customers into fanatics. Retrieved from https://www.cnbc.com/2019/05/22/hooked-how-costco-turnscustomers-into-fanatics.html Investopedia. (2019). 3 reasons Costco is a great company. Retrieved from https://www.investopedia.com/stock-analysis/040915/3-reasons-costco-great-companycost.aspx Costco Wholesale. (2019). Costco Wholesale. Retrieved from Costco Wholesale: https://www.costco.ca/ Costco Wholesale. (n.d.). Community relations. Retrieved from https://www.costco.ca/communityrelations.html Page, V. (2018). How Costco makes money (cost). Retrieved from https://www.investopedia.com/articles/investing/070715/costcos-business-model-smarter-youthink.asp Costco Wholesale. (n.d.). Kirkland Signature. Retrieved from https://www.costco.ca/kirklandsignature.html Engagement labs. (2017). Costco enjoys positive consumer conversations in real life, but underperforms on social media. Retrieved from https://www.engagementlabs.com/press/costco-enjoyspositive-consumer-conversations-in-real-life-but-underperforms-on-social-media/ Quinn, J. (2018). This social media account may change the way people shop at Costco (and 8 other stores) forever. Retrieved from https://www.cheatsheet.com/culture/this-social-mediaaccount-may-change-the-way-people-shop-at-costco-and-other-stores-forever.html/ The Costco Connection. (2015, September/October). Inside Costco. Retrieved from http://www.costcoconnection.ca/connectioncaeng/20150910?pg=65#pg65 The Costco Connection. (2015, July/August). Inside Costco. Retrieved from http://www.costcoconnection.ca/connectioncaeng/20150708?pg=63#pg63 The Costco Connection. (2016, January/February). Inside Costco. Retrieved from http://www.costcoconnection.ca/connectioncaeng/20160102?pg=61#pg61 Emma, B. (2019, July 17). Supermarkets and Grocery Stores in Canada - Statistics & Facts. Retrieved from Statista: https://www.statista.com/topics/2874/supermarkets-and-grocery-stores-in-canada/ Euromonitor International. (2019, March). Warehouse clubs in Canada.

Vividata. (2018). Vividata Spring 2018 Study.

Wida, E. (2019, July 26). Costco wants to make shopping easier with its new digital membership card.

Retrieved from https://www.today.com/food/costco-s-new-digital-membership-card-makesshopping-easier-t159650

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Student Information Client Name: JKL Company Product/Brand: Costco Group members: (Kay)Wing Man Liu, Joshua Jafri, & Junseo Lee Instructor’s name: Colin Robey Leisure Habits/Personal Characteristics Leisure Habits/Personal Characteristics

Vert% Index

Leisure Activities-Past 12 Months (Summary) [Baking From Scratch]

63.9

138

Leisure Activities-Past 12 Months (Summary) [Crafts]

36.0

166

Leisure Activities-Past 12 Months (Summary) [Sewing/Knitting]

25.8

154

Luxury/Status-Statements [Disagree-I am prepared to pay more for products that elevate my status]

76.8

110

Luxury/Status-Statements [Disagree-It is worth paying extra for quality goods]

25.6

123

Personal Interest-Statements [Disagree-My friends are more important to me than my family]

79.5

111

Personal Appearance-Statements [Agree-My confidence is greatly enhanced when I know I look my best]

64.6

117

Personal Appearance-Statements [Agree-I can’t leave home without make-up]

26.0

147

Source: VIVIDATA 2018 Spring 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999

Susan loves to occupy herself at home with activities such as baking (63.9%, 138), crafts (36%, 166), and knitting (25.8%, 154). She often gives the end results as gifts to her family, as she sees her family as very important, more so than her friends (79.5%, 111). Her skills leave much to be desired, but her family doesn’t mind, as long she doesn’t attempt grandma’s recipes.

She is rather frugal, as she does not want to pay more for expensive products to elevate her own status (76.8%, 110), nor does she pay extra for quality goods (25.6%, 123).

Unfortunately, the quality of what she buys is strongly reflected in what she makes.

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When she leaves the house, Susan always makes sure to put on her make-up (26.0%, 147), because she believes it looks her best with it on, and her confidence is greatly enhanced when she knows she looks her best (64.6%, 117). This makes her children feel very embarrassed, as she is a professional clown.

Media Habits W30-54, HHI $50,000 - $149,999 Magazines (Print) Magazines (Digital) %

Index

%

Index

Light

16.0

78

54.6

97

Medium Light

17.0

85

12.9

106

Medium

21.0

105

11.3

104

Medium Heavy

22.6

116

10.9

108

Heavy

23.4

118

10.3

96

Source: VIVIDATA 2018 Spring 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999

46.0% of the target audience are medium-heavy to heavy readers of print magazines, and are at least 16% more likely to read print magazines at this level. They read over 1.760 issues per month. In the past week, 63.7% of the target audience read or looked through a print magazine.

22.2% of the target audience are medium to medium-heavy readers of digital magazines, and are at least 4% more likely to read digital magazines at this level. They read 1.1 to 10.0 issues per month. In the past week, 39.6% of the target audience read or looked through a digital magazine.

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W30-54, HHI $50,000 - $149,999 Newspapers (Print) Newspapers (Digital) % Light

Index

%

Index

47.2

114

37.6

96

0.3

83

17.7

116

Medium

20.8

109

18.1

116

Medium Heavy

19.6

99

14.8

99

Heavy

12.2

63

11.8

79

Medium Light

Source: VIVIDATA 2018 Spring 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999

47.5% of the target audience are light to medium-light readers of print newspapers. They read under 0.125 issues per week. In the past week, 48.1% of the target audience read or looked through a print newspaper.

35.8% of the target audience are medium-light to medium readers of digital newspapers, and are at least 16% more likely to read digital newspapers at this level. They read 0.5 to 9.5 issues per week. In the past week, 45.1% of the target audience read or looked through a digital newspaper.

W30-54, HHI $50,000 - $149,999 Internet %

Index

Light

13.5

85

Medium Light

24.0

106

Medium

26.7

119

Medium Heavy

18.5

102

Heavy

17.3

84

Source: VIVIDATA 2018 Spring 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999

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50.7% of the target audience are medium-light to medium internet users, and are at least 6% more likely to use the internet at this level. They browse the internet for 8.51 to 21.00 hours per week. 98.2% of the target audience accessed the internet from any device yesterday.

W30-54, HHI $50,000 - $149,999 Internet via Mobile %

Index

Light

32.1

79

Medium

51.1

120

Heavy

16.8

102

Source: VIVIDATA 2018 Spring 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999

51.1% of the target audience are medium internet via mobile users, and are 20% more likely to use the internet via mobile at this level. They browse the internet via mobile for 4.01 to 21.00 hours per week. 87.1% of the target audience accessed the internet from a mobile device yesterday.

W30-54, HHI $50,000 - $149,999 Television %

Index

Light

20.9

105

Medium Light

27.0

125

Medium

21.1

95

Medium Heavy

14.2

98

Heavy

16.8

77

Source: VIVIDATA 2018 Spring 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999

47.9% of the target audience are light to medium-light television watchers, and are at least 5% more likely to watch television at this level. They watch television for 13.50 hours or less per week. 89.5% of the target audience watched television on any device yesterday.

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W30-54, HHI $50,000 - $149,999 Radio %

Index

Light

13.2

80

Medium Light

22.6

103

Medium

22.9

104

Medium Heavy

21.9

120

Heavy

19.4

92

Source: VIVIDATA 2018 Spring 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999

44.8% of the target audience are medium to medium-heavy radio listeners, and are at least 4% more likely to listen to radio at this level. They listen to radio for 7.51 to 14.00 hours per week. 77.9% of the target audience listened to the radio yesterday.

OOH: In the past week, 66.3% of the target audience have seen an OOH advertisement on a roadside billboard. In the same timeframe, 50.5% of the target audience have seen an OOH advertisement on a bus stop/shelter.

In the past week, 28.1% of the target audience have seen an OOH advertisement on a Roadside Billboard on a digital screen. In the same timeframe, 11.5% of the target audience have seen an OOH advertisement in a restaurant/restobar (serving alcohol and/or food) on a digital screen.

In the past week, 58.5% of the target audience have seen an OOH advertisement on a Roadside Billboard in other formats. In the same timeframe, 27.8% of the target audience have seen an OOH advertisement in a restaurant/restobar (serving alcohol and/or food). They are 9% more likely to have seen an OOH advertisement in this location.

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Geography

Food Shopping in Groceries Region

CDN Category Costco CDI BDI BOI Pop % Users % Users %

Atlantic

6.7

6.3

5.1

95

77

123

Quebec

23.0

25.9

25.0

112

108

104

Ontario

38.8

36.0

28.7

93

74

126

Prairies

18.1

16.5

21.7

91

120

76

BC

13.3

15.3

19.4

115

146

79

Source: VIVIDATA 2018 2-Year Readership Study. IMS. Path: Food Shopping-2+ Times HH Shops/Avg Week

People in Quebec and British Columbia are more likely to shop at grocery stores, with Quebec being 12.0% more likely and British Columbia being 15.0% more likely. People are 8% more likely to shop at Costco in Quebec, 20% more likely to shop at Costco in the Prairies, and 46% more likely to shop at Costco in British Columbia. The BOI for Atlantic, Quebec, and Ontario are all above 100, at 123, 104, and 126 respectively. It represents that these regions have more opportunity. Ontario has the most opportunity among these regions.

Location Based Information of Costco Region Number of people in target Number of stores People/ Store Atlantic

476,000

6

79,3330

Quebec

1,656,000

21

78,857

Ontario

1,836,000

36

51,000

Prairies

1,005,000

23

43,696

560,000

14

40,000

BC

Source: Statistic. (2018) Number of Costco warehouses in Canada by province 2018; VIVIDATA 2018 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999

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The table of “Location Based Information of Costco” was created from information in Number of Costco warehouses in Canada by province 2018 and VIVIDATA 2018 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999. Number of Costco warehouses in Canada by province 2018 provides the information about the total number of Costco warehouses in each location, and VIVIDATA 2018 2-Year Readership Study. IMS. Path: women 30-54, HHI $50,000 - $149,999 provides the total number of the target audience in each location. The number of People/ Store in the table represents the average number of people in the target in each store. Ontario has the highest number of people in the target, 1,836,000 and the highest number of stores, 36. BC has the lowest ratio of people per store, at 40,000 per store. The Prairies also has a low ratio of people per store, at 43,696 per store.

The top two regional priorities are the Prairies and BC. The ratio of people to the number of stores in the Prairies is low, at 43,696 people per store. It can be seen that people have better access to the store in this location. Although the BOI and CDI in Prairies are low, at 76 and 91 respectively, it has a high BDI of 120, meaning that people are less likely to go shopping in a grocery store, but more likely to go shopping at Costco. This is an opportunity to keep and grow these consumers' loyalty for Costco.

The ratio of the number of stores to people in BC is better than other regions in the table, as it has 40,000 people per store. It can be seen that people have better access to the store in BC. People in BC are more likely to shop at grocery stores and are more likely to shop at Costco as well, due to BC having a high CDI and BDI, at 155 and 146 respectively. This represents that Costco has a high market share and good market potential in BC. This means Costco can minimize risks and maximize potential in BC market. Therefore, Prairies and Quebec are the top two regional priorities.

Seasonality The table below was created from information in Costco Wholesale Corporation Reports Sales Results. It shows the net sales for each retail month in 2018. As the report does not specify currency and country, it is assumed to represent USD dollar and for global. The sales percentage

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data was calculated from the net sales (billion) in Costco Wholesale Corporation Reports Sales Results.

Costco Wholesale Sales Result in 2018 Month Sales %

J

F

M

A

M

J

8.4 7.0 8.9 7.4 7.6 9.3

J

A

7.3 7.6

S

O

9.4 7.7

N

D

8.8 10.6

Source: Costco Wholesale Corporation (2018) Costco Wholesale Corporation Reports January to Dec 2018 Sales Results

In 2018, December had the highest annual sales, 10.6%. September and June also accounted for the second and third highest annual sales in the same year, at 9.4% and 9.3% respectively.

The seasonal priorities will be September, November, and December. Based on the Costco Wholesale Sales Result, September (9.4%) and December (10.6%) received the top two highest sales in 2018. This was because December is a holiday season, so there will be more people shopping in this month. 70.0% of interviewees responded that they are more likely to shop when it is Black Friday or Boxing Day (Accenture, 2019). Black Friday is in November, and Boxing Day, as well as Christmas, are in December. Back to School sales happen in September, which also affects sales for Costco as people tend to shop in this month to get ready for school.

Competition Competition Costco Walmart Loblaws Market share

57.7%

18.9%

10.3%

Source: 45291CA Warehouse Clubs & Supercentres in Canada iExpert Report

1. Key issues a. Walmart Walmart is developing online shopping. Based on a successful pilot store in the Greater Toronto Area and Winnipeg, Walmart has started offering a variety of products through online

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shopping across Canada (Cision, 2019, para. 1 - 2). This expansion helps customers shop where, when, and how they want. Customers can also choose the delivery date and time (Cision, 2019, para. 1 - 2). As another effort to shop online, Walmart has launched Mobile Check-in. Customers can pick up the items they have chosen through this system by checking in 30 minutes in advance. This feature is available in 22 stores as of 2018. In 2019, the company plans to expand the service to all stores (Walmart Canada, 2018, para. 1). To better settle online shopping, Walmart Canada plans to focus on repairing 31 stores across Canada in 2020 and invest more than $200 million in its store network (Cision, 2019, para. 1).

Early 2019, Walmart announced "Charter on Plastics", which promises to change to a package with less environmental impact. Since then, Walmart has reduced 1.1 million pounds of plastic in stores (Narcity, 2019, para. 1). Walmart endeavours to treat all the farm animals humanely in the supply chain of Walmart. Walmart will make only cage-free eggs available by 2025 (Walmart Canada, n.d., para. 1). b. Loblaws Loblaws has a good result in e-commerce. Loblaw's e-commerce revenues in 2018 exceeded $5 billion (Loblaws, 2019, p. 6). Loblaws is testing the Express click-and-collect grocery service by using the less-productive space. Unlike the traditional way in which employees prepare items ordered in stores, this system can deliver items to the direct warehouse in a mini-warehouse for faster processing. This method is expected to be launched in 2020 (Robertson, 2019, para. 9-10).

Loblaw's PC Optimum loyalty program is being used by 18 million members. Customers use PC Optimum for two-thirds of their retail transactions (Loblaws, 2019, p. 7). But there has been an issue of declining customer loyalty. Loblaws is the most involved brand of the bread price-fixing story. This scandal claimed that Loblaws conspired for years to increase the price of packaged bread products (Cbc, 2019, para. 4). Moreover, there was a controversy that Loblaw collected too much information when compensating for the bread price-fixing scandal to customers (Ctv News, 2019, para. 1).

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Loblaws is also working to protect the environment. Loblaw was announced as the founding retailer of Loop, a circular shopping system designed to reduce waste (Mohan, 2019, para. 1).

2. Current Users Brand

Current Users

Costco

W30-54, HHI $50,000.00 - $149,999.00

Walmart W18-49, HHI < $74,999.00 Loblaws W50+, HHI $50,000.00 + Source: VIVIDATA 2018 2-Year Readership Study. Groceries – Food Shopping/ Costco, Walmart, Loblaws

The current users of Walmart are women ages 18 - 49, with a household income under $74,999.00. The current users of Loblaws are women ages 50+, with a household income of over $50,000.00.

2. Competitive Geographic Analysis Competitive Geographic Analysis Region

CDN CDI Costco Walmart Loblaws POP % BDI BDI BDI

Atlantic

6.7

95

77

75

221

Quebec

23.0

112

108

49

24

Ontario

38.8

93

74

109

170

Prairies

18.1

91

120

143

48

B.C.

13.3

115

146

118

39

VIVIDATA 2018 2-Year Readership Study. Groceries - Food Shopping/ Costco, Source: VIVIDATA 2018 2-Year Readership Study. IMS. Path: Food Shopping-2+ Times HH Shops/Avg Week

-

People in the Prairies are 43.0% more likely to shop for groceries at Walmart, and people in BC are 18.0% more likely to shop for groceries at Walmart.

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People in Atlantic are 121.0% more likely to shop for groceries at Loblaws, and people in Ontario are 70.0% more likely to shop for groceries at Loblaws.

-

In Quebec, people are 8.0% more likely to shop for groceries at Costco, but 51% and 76% less likely to shop for groceries at Walmart and Loblaws respectively.

3. Promotions a. Walmart Walmart and the Canadian Red Cross is one of the largest partnerships in the Red Cross movement around the world. Funds from this relationship were used for B.C. wildfires relief activities, and for helping those affected by B.C. wildfires (Walmart Canada, n.d., para. 1 - 2).

Walmart has partnered with Food Banks Canada and Canada's Breakfast Club to create Canada where no one goes hungry (Walmart Canada, n.d., para. 1). Walmart Canada is donating food and money to food banks across Canada (Walmart Canada, n.d., para. 2). In collaboration with the Breakfast Club, 167,000 students are served daily to 1,455 schools across Canada (Walmart Canada, n.d., para. 4). b. Loblaws Loblaws has placed 19 in-store dietitians in stores in Atlantic Canada in 2014. In-store dietitians provide the information of a nutritious diet to educate and support customers (Loblaw, 2014, p. 14). Also, Loblaw has been sponsoring a local scholarship program for years. The program is open to all Canadian residents and permanent residents (Loblaw companies limited, n.d., para. 1 - 2). Loblaw, a member of Imagine Canada, has committed to donating at least 1% of annual pre-tax profits to non-profits and charities across Canada (Loblaw companies limited, n.d., para. 2 - 3).

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4. Media Spending Share of Voice Grocery - Share of Voice (%) Brand

Total News. Magazine OOH Radio

TV

Online

Costco

28.4

50.8

7.1

22.1

24.4 44.6

0.0

Walmart

38.7

8.5

92.9

25.4

53.6 22.8

71.2

Loblaws

32.9

40.7

0.0

52.5

22.0 32.6

28.8

source: R_Competitor Spending All

-

The spending between Costco (28.4%), Walmart (38.7%) and Loblaws (32.9%) are evenly split.

-

In magazine, Walmart is the dominant advertiser with 92.9% share of voice. In contrast, Costco has only 7.1% share of voice.

-

In Radio, Walmart is the major advertiser with a 53.6% share of voice, while Costco has a 24.4% share of voice.

-

In TV, Costco is the major advertiser with a 44.6% share of voice. In contrast, Loblaws has a 32.6% share of voice. Walmart is with a 22.8% share of voice.

-

In Online, Walmart is the overwhelming advertiser with a 71.2% share of voice, while Loblaws has a 28.8% share of voice. Costco does not have any share of voice.

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Spend by Medium Grocery - Spend by Medium (%) Brand

News. Magazine OOH Radio

TV

Online 0.0

Costco

51.7

3.5

14.7

5.7 24.4

Walmart

6.3

33.4

12.4

9.2

9.1

29.6

Loblaws

35.8

0.0

30.3

4.4 15.4

14.1

Total

28.9

13.9

18.9

6.6 15.5

16.1

Source: R_Competitor Spending All

-

51.7% of Costco’s budget is spent on newspaper, and Loblaws spends 35.8% of the budget on TV.

-

33.4% of Walmart’s budget is spent on Magazine. While, only 3.5% of Costco is spent on magazine.

-

Loblaws spends the dominant budget (30.3%) of the budget on OOH. In contrast, only 14.7% of Costco’s budget is spent on OOH.

-

Walmart spends 29.6% of the budget on Online. While Costco does not spend any budget on online at all.

-

Newspaper accounts for 28.9% of the industry’s media spending.

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Reference Accenture. (2016). Retailers need to be efficient, innovative and responsible when they do business this holiday shopping season. Retrieved from https://www.accenture.com/caen/2016-holiday-shopping-survey Costco Wholesale Corporation Reports January to Dec 2018 Sales Results. (2018). Costco Wholesale Corporation. Retrieved from http://investor.costco.com/search?query=COSTCO+WHOLESALE+CORPORATION+ REPORTS&f%5B0%5D=type%3Anir_news&op=Search Statistic. (2019). Monthly retail sales of grocery stores in Canada from 2015 to 2019 (in billion Canadian dollars). Retrieved from https://www-statistacom.library.sheridanc.on.ca/statistics/461774/monthly-retail-sales-of-grocery-storescanada/ Statistic. (2018). Number of Costco warehouses in Canada by province. Retrieved from https://www.statista.com/statistics/537467/number-of-costco-warehouses-canada/ The Motley Fool. (2019, April 14). Costco's Consistently Strong Sales Growth Continued in January. Retrieved from https://www.fool.com/investing/2019/02/12/costcosconsistently-strong-sales-growth-january.aspx Vividata. (2018). 2-Year Readership Study. IMS. Path: Food Shopping-2+ Times HH Shops/Avg Week Vividata. (2018). 2-Year Readership Study. IMS. Path: Grocery stories IBISWorld. (2019).4 5291CA Warehouse Clubs & Supercentres in Canada iExpert Report

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Walmart Canada. (2019). Grocery delivery in as fast as an hour: Walmart Canada and instacart expand on-demand grocery delivery to hundreds more communities across the country.

Retrieved from https://www.newswire.ca/news-releases/grocery-delivery-in-as-fast-asan-hour-walmart-canada-and-instacart-expand-on-demand-grocery-delivery-to-hundredsmore-communities-across-the-country-831571772.html Walmart Canada. (2018). Walmart Canada strengthens e-commerce integration with launch of additional online grocery pickup locations, mobile check-in and pickup towers. Retrieved from https://www.walmartcanada.ca/news/2018/10/23/walmart-canada-strengthens-ecommerce-integration-with-launch-of-additional-online-grocery-pickup-locationsmobile-check-in-and-pickup-towers Walmart Canada. (2019). Walmart Canada invests over $200 million in updates to improve customer experience across 31 stores, enhancing offerings and expanding e-Commerce integration. Retrieved from https://www.newswire.ca/news-releases/walmart-canadainvests-over-200-million-in-updates-to-improve-customer-experience-across-31-storesenhancing-offerings-and-expanding-e-commerce-integration-826090558.html Walmart Canada. (2019). Walmart Canada eliminated 1.1 million pounds of plastic from hitting their shelves. Retrieved from https://www.narcity.com/news/ca/walmart-canada-haseliminated-11-million-pounds-of-plastic-in-stores Walmart Canada. (n.d.). Animal welfare. Retrieved from https://www.walmartcanada.ca/responsibility/animal-welfare Robertson, S. K. (2019). Battle in discount grocery sector weighs on prices as Loblaws, other retailers struggle to hold on to customers. Retrieved from https://www.theglobeandmail.com/business/article-loblaw-profit-revenue-gain-as-biggerbaskets-help-offset-slower/ Ctv news. (2019). Loblaw gathered too much personal info in $25 gift card offer: privacy commissioner. Retrieved from https://www.ctvnews.ca/business/loblaw-gathered-toomuch-personal-info-in-25-gift-card-offer-privacy-commissioner-1.4641316 Mohan, A. M. (2019). Loblaw announced as first Loop retail partner in Canada. Retrieved from https://www.packworld.com/issues/sustainability/news/13377835/loblaw-announced-asfirst-loop-retail-partner-in-canada

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CBC. (2018). Loblaws losing consumer trust after bread price fixing story, Dalhousie study finds. Retrieved from https://www.cbc.ca/news/business/grocery-bread-price-fixinggrocery-trust-dalhousie-1.4584400 Walmart Canada. (n.d.). Disaster preparedness & relief. Retrieved from https://www.walmartcanada.ca/community-giving/disaster-preparedness-and-relief Walmart Canada. (n.d.). Hunger relief. Retrieved from https://www.walmartcanada.ca/community-giving/hunger-relief Loblaw companies limited. (n.d.). Loblaw scholarship fund. Retrieved from https://www.loblaw.ca/en/responsibility/community/scholarshipfund.html Loblaw companies limited. (n.d.). Charitable giving. Retrieved from https://www.loblaw.ca/en/responsibility/community/charitable-giving.html Loblaw companies limited. (2014). Loblaw 2014 Corporate Social Responsibility Report.

Retrieved from https://provisioncoalition.com/Assets/ProvisionCoalition/Documents/CSR%20Reports/R etailers/Loblaw-CSR-Report-2014-Food-Beverage-Retailer-Sustainability.pdf