The Localization Strategies and Success of Costco : Focusing on a Japanese Mature Retail Market

Purpose - This research addresses the question of how an international retailer like Costco can succeed in a foreign mature market and satisfy the local consumers. Our study aims to promote our understanding of how foreign retailers influence local consumers in a mature market with differentiated business models. Research design, data, and methodology - Our study uses company publications, secondary sources of information and the results of a questionnaire survey consisting of 106 participants. Consumer responses were solicited through a questionnaire survey conducted in the city of Kobe in December of 2013. Results - Product differentiation from local retailers in a mature market like Japan gave Costco a competitive edge. Compared with local supermarkets, Costco was preferred by Japanese consumers for its variety of goods that it carries, as well as in-store promotion large package of selling units, in-store amenities, and customer services. Conclusions - First, a theoretical framework is proposed in this study that can aid in developing localization strategies in a mature market such as Japan. Second, it reveals that an international retailer can succeed in a foreign market by stimulating local consumers to change their purchasing behavior, without having to alter the prevailing format of operation.