Costco Goes to the Mall for Growth
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.
Jeff Brotman, co-founder
and chairman of Costco, recently told Dow Jones
the warehouse club operate is looking "to accelerate" mall store
Recently, Costco signed an agreement with The Westfield Group to open
clubs at malls in Los Angeles, Sarasota, Florida, and Wheaton, Maryland.
Sinegal, CEO of Costco, said in a press release, "We are pleased to
partner with Westfield and look forward to providing great value and convenience
to current and future Costco members in three vibrant markets. It is especially
exciting to join new communities such as Sarasota and Wheaton, as well as to
join forces with Westfield in Los Angeles — right in the heart of the
San Fernando Valley’s Warner Center business district."
Costco’s move into
malls has been made easier because space has opened and lease terms have become
more attractive in recent years as other big box retailers have closed stores.
Mr. Brotman told Dow Jones, "Our preference is to never
be in a mall or by a mall. But in metro areas there just is not that much land,
and we still want to expand."
Randy Brant, executive vice president at
mall owner Macerich Co., said Costco is an attractive tenant for shopping center
"Their average store does over $100 million a year in sales and there
aren’t many department stores that can do that, especially in this environment," Mr.
Brant told Dow Jones. "The only downside is typically a customer
making large purchases at Costco will get in their car and head home."
Discussion Questions: What is your assessment of Costco’s move into mall
locations? Is this a healthy prospect for malls? Is this a strategy that
would work equally well for Costco’s rivals?
- Westfield and Costco Announce Multiple Center Agreement – PRNewswire
- Costco Sees Malls As The Next Way To Grow Business – Dow Jones Newswires/The
Wall Street Journal