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BusinessWeek reports that Costco Corp. is expressing concerns that as consumer spending seems to “run out of steam,” it may start to see the impact on its sales and profit growth goals. Though the company is far from being troubled, the effect of a decline in consumer confidence could impact impulse purchases, limiting shoppers to buying basics -- shampoo and soft drinks, please, and we’ll pass on the trampoline.

“Revenues aren't expected to rise much in 2003, and operating expenses likely will inch up as Costco spends more in such areas as health care,” BusinessWeek reports. “CEO Jim Sinegal says the company is keeping its long-term growth goals. ‘Any target will have hiccups, though it's not an unreasonable target for the long term,’ says Sinegal, who co-founded Costco in 1983.

One of Costco’s main advantages, according to the piece, is that it tends to be more productive and higher sales than its competition, and is a market share leader in affluent communities around the country.

In addition, Costco has built a strong business in categories that may be less affected by economic downturns -- fresh food, packaged food, gasoline, prescription drugs, and film processing.
KC's View:
We’re consistently impressed by the Costco approach….and while we’ve never indulged in any of the huge impulse items that the one near us sells, we’re always picking up a DVD or a book or some food product that it is sampling that we’d never heard of or had no intention of buying.

We also think that its strategy of developing stand-alone home furnishing warehouses and gourmet stores is a fascinating one, and look forward to seeing how it pans out.