How does the current U.S. economy affect REI retail operations?
The U.S. economy affects REI retail operations through the fluctuation of producer and consumer price index. According to the Bureau of Labor Statistics, the current producer price index is up .05 for the month of June and the consumer price index is up .2 for June (Economy at a Glance, n.d.). This means that even though the cost of product to the consumer is up for the month, the company is actually losing money on the products due to the increase in producer pricing. Additionally, the cost of importing has increased .2 in the month of June as well, further increasing the cost of product for REI.
Increased cost of product for REI means less money being generated. While the overall loss is not substantial, it is still a loss regardless. This could potentially mean the need to cut back on operations and possibly layoffs. While this is never an easy decision to make, it is sometimes necessary for a business to stay afloat. The alternative to this decision is in return it hurts the local economy by reducing the number of jobs in the area. Therefore, it is critical that all the necessary information is gathered on the overall savings of layoffs vs the overall loss in sales due to the local economy taking a hit.
How does the current global economy affect REI retail operations?
The global economy is once again taking a hit. According to Mayeda (2016), the global growth forecast for 2016 was reduced from 3.6% to 3.4%. Which according to Worstall (2016), “we tend to think that if global economic growth falls to 2% (some people) or 3% (a smaller number of others) then that’s what we call a global economic recession”. This drop in the global economy will affect REI’s overall sales. To accommodate for this drop in economy REI will need to focus their marketing toward their most profitable items and potentially drop some of their least profitable items to make up for the drop in sales due to the e