What’s the big deal about Costco?

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Ever since the announcement of Costco coming to University Drive in Mishawaka, the area has been a buzz about the store opening.  There have been several mentions of the store in the South Bend Tribune as well as the Market Basket online chats and the topic comes up frequently in conversations.  Mishawaka already has one bulk product membership store in Sam’s Club, so why is Costco creating a stir?

The most notable impact of Costco is the construction of the Capital/Fir Rd connection project.  Costco typically draws shoppers from a 50+ mile radius, making convenient access from the interstate crucial.  The Capital connector will provide a more direct route from I80/90 to University Dr.  The increase traffic flow on these routes will encourage additional retail development.  City Plaza on University Dr has seen moderate success with many tenants opening and closing a relatively short time later.  A new Costco location will not only draw shoppers from the Toll Rd to the east but will also bring shoppers further from the west, shoppers who previously traveled no further than the Super Target.  We should see in the next year or two, an increase in the occupancy of City Plaza and new developments along the corridor.

The question still remains, what makes Costco different from Sam’s Club?  Shoppers new to Costco will find many items in the store packed in the Costco private label, Kirkland’s.  The Kirkland’s label is known for its low price and high quality.  Costco will often change the product supplier under this label if suppliers do not meet Costco’s quality and price standards as demanded by its members.  Shoppers that know this product label and its quality have shown great loyalty toward it.  Costco leverages this loyalty, packing many items under it and keeping the quality consistent.  It has been many years since I shopped at a Costco in Olympia Washington, but I still remember the Kirkland’s fruit and snack mix and look forward to buying it again.  Whenever I travel back to Washington, I always see the label in my sister’s cupboard and am reminded of how I enjoyed shopping at Costco.

It the last year, Sam’s Club has had financial losses and laid off employees while Costco has done quite well.  The difference may be, as pointed out Jillian Berman in the Huffington Post (05/16/2014 8:25 am EDT ), is that Sam’s Club intentionally targets the low income shopper while Costco targets a more affluent clientele.  The Costco shopper is better equipped to weather an economic downturn than those of Sam’s Club.  The Costco membership fee is $55 compared to $45 of Sam’s.  Costco’s are typically located in higher income earning areas, their stores are welcoming and their employees appear happy.  Deserving or not, Walmart has received some bad press in recent years concerning price tactics with their vendors and wages paid to its employees.  Costco has avoided this type of bad publicity and it could be argued has a better brand image in the market place.

All the buzz about Costco coming to Mishawaka is well deserved.  It will not only add jobs and spur retail development in the nearby area, bringing in shoppers from all over Michiana, but it will also provide shoppers and small businesses with new alternatives.  I look forward to having the Kirkland’s dried snack mix in my pantry and enjoying the $1.50 Costco hot dog and pop!

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