How Costco Decides Where To Open A New Store

[punikahakaiferret]

Thank you for the explanation! I'm going to have to look into it. The concept is intriguing and really, really interesting, especially for some place like Walmart...whose entire brand seems to be built around excess *everything*.

I do have to say I wouldn't mind going during those times...I indeed can get overwhelmed by too many people, too much noise, too much activity and just too much *everything*...I have been doing more and more drive-up pickups at Target, Safeway, etc., just to not be so much a frazzled wreck after a day of necessary shopping in Hilo, caught up in the "madding crowds"

Now...how about "sensory friendly" traffic!

Yeah, yeah. Keep dreamin'! :-D

[HereOnThePrimalEdge]

I just wish people in stores would drive their shopping carts like they’re on the highway.

* stay on the right side
* pull over next to the shelves if you want to park for awhile and puruse the selections
* don’t act like you’re the only person if the store on a post-apocalyptic supply run, be aware, there are other people around you
* and last but not least, put a horn on the cart.  Even though it’s Hawaii, if the horn is used, in my experience there’s plenty of people needing a wake up call.  Give stink eye to the one’s GETTING the beep-beep.

[My 2 cents]

I think there is a part of the Costco equation that is being over-looked.  How much business would the Kona store lose with the opening of a Hilo store?  All of it’s East-side customers.  Every last one of them. 

So when calculating how much more money Costco could make by opening a new store in Hilo/Puna you can’t count the folks who already make the drive to Kona. Costco is already getting their money.  Basically, Costco would be doubling their overhead costs for the same number of customers.  To make it worthwhile for the company there would have to enough new customers, people like Punikahakaiferret who currently don’t make the drive but would patronize a Hilo/Puna store.  And that number would have to be equal to or greater than the number of customers that they are currently serving in Kona.

Maybe there are that many.  I really don't know.

[HereOnThePrimalEdge]

My 2 cents -
At the link on the original post the CFO explains its company policy to open another store in an area where the existing store reaches $300-$350,000 a year in sales.  When I contacted Costco I asked whether the Kailua-Kona store had that in sales, but they replied individual store sales numbers are confidential.  

So they might-could-maybe open a Hilo location if Kailua-Kona has good numbers, even if they lose business on the west side.  It’s part of their corporate strategy.

[HiloJulie]

I just wish people in stores would drive their shopping carts like they’re on the highway.

* stay on the right side
* pull over next to the shelves if you want to park for awhile and puruse the selections
* don’t act like you’re the only person if the store on a post-apocalyptic supply run, be aware, there are other people around you
* and last but not least, put a horn on the cart.  Even though it’s Hawaii, if the horn is used, in my experience there’s plenty of people needing a wake up call.  Give stink eye to the one’s GETTING the beep-beep.

EXCELLECT suggestions!

I would only add:

* Leave the 8 cousins, 4 grandkids and their 9 friends HOME and have Mom or Dad or Aunti or Uncko "babysit" while the other goes shopping! (Or at least lock them in the car)

[My 2 cents]

My 2 cents -
At the link on the original post the CFO explains its company policy to open another store in an area where the existing store reaches $300-$350,000 a year in sales.  When I contacted Costco I asked whether the Kailua-Kona store had that in sales, but they replied individual store sales numbers are confidential.  

So they might-could-maybe open a Hilo location if Kailua-Kona has good numbers, even if they lose business on the west side.  It’s part of their corporate strategy.

I doubt that their strategy is to go in blindly based on a number.  I’m quite certain that they evaluate other criteria.

For example, in most places where they would open a new store 100 miles to the east of an existing one because of the population there, there is probably another population 100 miles further that would continue the growth.  We are on an island.  That condition doesn’t exist.

Anyway, I’m not trying to put the kibosh on anything.  Just trying to understand why they might be dragging their feet on this.  It has to make financial sense for them or they won't do it.

[HereOnThePrimalEdge]

My 2 cents,
I had dinner with a friend from the mainland the other night. He has 5 Costcos within a 20 minute drive of his house.  Did you read the Costco earnings call? I simply quoted what their CFO said during the call.

[HiloJulie]

"It has to make financial sense for them or they won't do it."

Well, it already makes sense for:

Walmart
Safeway
Home Depot
Orchid Isle Ford
Office Depot

Oh well......., as for me, I'd say between my husband and I, we go to Costco 3 to 4 times a year. Having said that, I would clarify that those Costco visits are only due to us being in Kona on other matters and does not mean we go to Costco specifically to go to Costco.

Now, having said that, if there was a Costco in Hilo, I'd probably would have earned an assigned front row parking spot by now!

And I'd like to clarify HOTPE's post - it's at an annual revenue of 300 to 350 MILLION!

[My 2 cents]

Ok, I’m convinced. I guess the numbers crunchers at Costco are just stupid.

On the bright side, I am thankful that I don’t live in a place where they would decide to put 5 of their stores within a 20 minute drive radius of my house.

[leilanidude]

My 2 cents,
I had dinner with a friend from the mainland the other night. He has 5 Costcos within a 20 minute drive of his house.  Did you read the Costco earnings call? I simply quoted what their CFO said during the call.

Population density has to support that. 200k total people on the island won't support 2 Costco's