Richard Seesel

Costco Goes to the Mall for Growth

August 25, 2010

FROM RETAILWIRE:
In the past, Costco has opened the occasional club in a mall. Now, however, the company is making a push to put its stores in shopping center spaces that typically house department store anchors. What is your assessment of Costco's move into mall locations?      [more...]

Mall developers are smart to think outside the box by finding new tenants like Costco and Target. The traditional regional mall of twenty years ago--Sears, Penney and two department stores as anchors--simply isn't a viable model anymore. There isn't any doubt that big box retailers can be a significant traffic draw to the mall, even if they are "destination" stores. It certainly beats having an empty space.

The challenge for Costco is to make the regional mall model work: Is the footprint adequate in terms of interior space and parking? Does the project require demolition or retrofitting of an empty mall anchor? Do the occupancy expenses support Costco's low-cost operating model? Plenty of opportunity for Costco, but also plenty of questions to be answered before this turns into a national growth strategy.