Nike Stores Decreasing?

Recently, a Nike Store in California has decided to move its shop to a smaller one, to decrease their fixed cost on the land. A fixed cost is different from a variable cost, as a fixed cost is a cost that is “fixed”, meaning that it does not change (such as the cost of the land). A variable cost will change depending on other factors, such as the amount of people working – so an example for a variable cost would be wages. This decrease in the fixed cost was caused by the economic recession, where consumers’ demand for Nike has fell. So by reducing the fixed cost, Nike has successfully decreased their total cost, both fixed cost and variable cost; however, moving a store to a smaller shop cannot be done in a day, and so it would be something that Nike would have to plan for a long run as there are many factors to consider before moving a store.

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