Costco—macroeconomic Analysis

Siwei Ni

Professor Ed Torres

Economic 1A

5/05/2015

                                                Costco—Macroeconomic Analysis

History:

                Costco Wholesale Corporation is a membership—only warehouse club that provides a wide selection of merchandise. Right now it sells many other products that are more difficult to handle, such as fresh produce, meat, dairy, seafood, books, jewelry, hot tubs, and electronics. As of July 2012, it was the second largest retailer in the United States. On September 15, 1983 founded by James and Jeffrey H, Costco opened it is first warehouse in Seattle Washington. James had started in wholesale distribution by working for sol price at the price club by Jeffrey, an attorney from an old Seattle retailing family, had also been involved in retail distribution from an early age. Costco merged with price club in the Canadian province of Quebec. Costco’s business model and size were similar those of price club. Which was founded by sol and Robert price in 1976, the combined company price Costco was effectively double the size of each of its parents, just after the merger price Costco was effectively double the size of each of its parents, just after the merger price Costco had 206 locations generating $16 billion in annual sales, Price Costco was initially led by executives from both companies, but then sol and his son Robert price founded price enterprise and left Costco in December 1994.

                Now today Costco was the first company to grow from zero to $3 billion in sales in less than six years. For the fiscal year ending on August 31 2012, the company’s sales totaled $97,062 billion; with $1,809 billion net profit. Costco is 24th on the 2012 Fortune 500. The ACSI named Costco number one in the specialty retail store industry with a score of 83 in 2008. Costco focuses on selling products at low prices, often at very high volume. These goods are usually bulk — packaged and marketed primarily to large families and businesses. Furthermore Costco didn’t carry multiple brands or varieties where the item is essentially the same except when it has a house brand to sell. Typically under the Kirkland signature label vendor, allowing further reductions in price, and reducing marketing costs. If Costco management feels the wholesale price of a price of a product is too high, they will refuse to stock the product. This research is abstract from Wikipedia.

Consumer Confidence Index:

                Consumer confidence is that consumers are expressing through their activities of spending and saving. When the company has a good consumer confidence index, it will be an optimistic achievement. The confidence is measured by the US consumer confidence index. It was issued monthly by the conference board. For example, Costco keeps costs down and keep customers satisfied is that avoids the trap of trying to be a ‘‘place for everyone” you just know when you step into a Costco store that you will find very limited but quality choice. In my opinion, I thought the consumer confidence index was very important to affect Costco or the US economy market. In an interconnected global economy, tracking international consumer is a lead indicator of economic trends, so it is the part of consumption component level of the Gross Domestic Product, if CCI changed it also affects stock market prices. In the other hand CCI increased, the consumption indicating will be higher, consumer will spending more money, or CCI decrease that’s mean the economic growth are slow down and consumer are decrease their spending. So we can reduce the products price or have some activities. Because declining consumer confidence is a sign of slowing economic growth, and economy may have a touble, to attract customers to purchases.