Costco shows no fear

Markups at supermarkets are in the mid-20% range and markups at Wal-Mart are in the high teens to low-20% range, while Costco's average markup is about 11%.

"In terms of pricing, I don't want to be arrogant about it, but I can't predict what the future will hold," the CFO said. "We've held our own pretty well in tough times."

Some of you might be wondering, since Costco's markup is 10% lower than that of Wal-Mart's as stated above, why does people still continue to shop at Wal-Mart instead?

Well there are a few fundamental reasons to that.

Firstly, it offers a greater variety with greater innovation which showcase products in an orderly manner and provides the consumers with the most up-to-date products along with impeccable services.

Secondly, it provides more value than Costco. Costco is playing a commodity-low price strategy whereby the focused on cost leadership. Conversely, Wal-Mart is playing more of a differentiation strategy whereby they try to make their organisation and display standout with their services.

These 2 factors allowed Wal-Mart to stand out from Costco and combat their low-priced products.

Credit -marketwatch, -printingdone