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Surname 1 Surname Instructor Course Date Case Study: COSTCO Introduction Costco Wholesale Corporation is an American multinational corporation that sells a variety of products through its membership-only warehouse clubs. It is the second largest retailer across the globe after Walmart. Jeffrey H. Brotman and James Sinegal founded the company in 1983 in Seattle, Washington. The company continues to grow and expand by establishing stores in new overseas locations. Costco depends on the purchasing capacities of consumers. According to the company’s mission, it strives to provide high quality goods and services to at the lowest possible prices (Hitt, Ireland, and Hoskisson 61). This enables it to gain a competitive edge in the market. Costco increases its profitability by striving to achieve rapid inventory turnover. The company buys its inventory using its working capital. "Treasure-hunt merchandise" is one of the unique segments of the company. The company keeps 1,000 of its 4,000 products. These products keep changing. The company attracts customers to this segment by offering irresistible deals that rapidly disappear from the store. In addition, Costco does not acquire its luxury offerings from high-end manufacturers who charge a high price for them. The company searches to opportunities to purchase the luxury products from legally gray markets where retailers would like to get rid of their inventory quickly. Costco's core strategy is to sell a limited number of products in very few varieties. This helps in reducing the costs and improving the sales volumes of the store. The company also uses a membership only business model where customers pay a membership fee to access low-cost products available at the stores (Hill, Jones, and Schilling C- 243). Global and U.S. Macro-Economic Environment of the Retail Industry The economic environment influences retail sales. A robust economy leads to an increase in the disposable income of consumers. This consequently leads to an increase in sales. It also enables retailers to sell a larger amount of more valuable goods. On the other hand, a sluggish economy leads to a reduction in consumer confidence. This may make people spend less leading a reduction in retail sales. It ultimately forces the retailers to reduce the prices of their products. Economic and government factors that affect the retail industry. For instance, inflation, taxation, and import and export laws, which relate to the role of economic and governmental factors in the retail industry, lead to a reduction in the purchasing power of consumers. The American and global economy has recovered from the global financial crisis. This is expected to lead to an increase in the disposable income of consumers, which would lead to an increase in the sales of retailers such as Costco.

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