tropolitan Area. Attempts by Price Costco to improve the company's market penetration in the Boston Metropolitan area must address both the issues that have placed the chain number three in the Massachusetts market, and the slowing growth and weakening sales that characterize the warehouse club industry.
Retail store sales growth generally has been strong (+9.1 percent) in the United States in 1994 and is projected to be strong (+5.4 percent) again in 1995. Growth in the warehouse club industry, however, has been much less vigorous.
Consumer confidence levels slipped in early November 1994. A slippage in consumer confidence provides discount retailers with an advantage over more traditional retailers. Thus, should consumer confidence continue at these levels, the warehouse club industry should benefit.
The unemployment rate in the United States has trended downward since the election of President Clinton. Lower levels of unemployment generally exert positive influences on retail sales. The Consumer Price Index in the United States has experienced only modest change over the past year. This modest rate of change has alarmed the Chairman of the Federal Reserve Board, but has not been found bothersome by anyone else. Modest changes in the rate of inflation generally bode well for retail sales.
Real wages have been rising at modest levels in the United States over the past year. Increases in wages have generally exceeded inflation, a state of affairs that generally is favorable to retail sales. The gross national product (GNP) has been increasing steadily in 1994. GNP growth generally is favorable to retail sales.
The Boston Metropolitan Area is characterized by a positive business environment. Both state and city planning foster economic growth. These factors are supportive of the warehouse club industry activity in the Boston Metropolitan Area.
Factors of significance to the Price Costco situation in the Bos...