How Costco Decides Where To Open A New Store

[terracore]

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

I think the tourists negate the population part of the equation.  When I've been to the Kona costco there were times when it was readily apparent most of the shoppers were tourists.  Kona Kostco is clearly having a tough time dealing with the hordes of people.  In the last few years they started enforcing the "you need a costco card to use the food court" rule and they bought an adjoining lot for their employees to park because the customer parking lot was always full, and there are certain days and times when there still aren't any spots readily available.  I see the problems cropping up in other areas, like they are having problems keeping their warehouse stocked with employees trying to move product into place with pallet jacks etc.  I've also noticed parts of their store shrinking, the last time I went they only carried a fraction of batteries (cars, golf carts etc) as they used to.

And then there is Cost-U-Less.  Most of the stuff they sell is from Costco that is marked up by quite a bit.  The ghetto-pricing off-brand Costco on the East Side.  When the bowling place was for sale I suggested that Costco buy the bowling place, Cost-U-Less, and any other fringe properties, raze it all, and put in a costco.  No dice.

[kalianna]

One can only imagine what Kilauea Ave. would be like had they done this.

[Durian Fiend]

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

I think the tourists negate the population part of the equation.  When I've been to the Kona costco there were times when it was readily apparent most of the shoppers were tourists.  Kona Kostco is clearly having a tough time dealing with the hordes of people...

That's true, Kona Costco is a madhouse pretty much at all times.  Considering the high cost of food these days and the greater number of people living on the east side, it seems to me there would be no question that a Costco on this side would be wildly successful without killing off the Kona store, although Walmart probably wouldn't appreciate it much.

[alaskyn66]

Fairbanks alaska has a pop. ~95000 yet they have a Costco.
Puna and Hilo districts have about the same population when combined.

[terracore]

Fairbanks alaska has a pop. ~95000 yet they have a Costco.
Puna and Hilo districts have about the same population when combined.

Juneau has 30,000 people and a Costco, and no roads for outsiders to access it, and virtually no independent tourism (it's all cruise ships and the Boat People never go to Costco).  It's also the smallest Costco in the fleet, though there were at times smaller ones, but proof of concept that they can build a profitable Costco in a tiny hamlet literally in the middle of nowhere if they want to. It's not a stretch to say that virtually every household in Juneau had a Costco membership or at least access to the store through an immediate family member.

When I was in Gustavus, the guy who ran the car rental place was getting ready for his Costco run to Juneau. He was a licensed pilot and was bragging that his run-down Cessna was modified to run off of car gas, and he could do the round-trip run for under $15. It costs more than that to drive to Kona. The car he rented me had no tread left on the tires and I was literally driving on the steel belts. Hopefully there was enough room in his little airplane for tires. But I'm pretty sure he was fetching drinks and toilet paper.

[Durian Fiend]

Fairbanks alaska has a pop. ~95000 yet they have a Costco.
Puna and Hilo districts have about the same population when combined.

Juneau has 30,000 people and a Costco, and no roads for outsiders to access it, and virtually no independent tourism (it's all cruise ships and the Boat People never go to Costco).  It's also the smallest Costco in the fleet, though there were at times smaller ones, but proof of concept that they can build a profitable Costco in a tiny hamlet literally in the middle of nowhere if they want to.  It's not a stretch to say that virtually every household in Juneau had a Costco membership or at least access to the store through an immediate family member.

When I was in Gustavus, the guy who ran the car rental place was getting ready for his Costco run to Juneau.  He was a licensed pilot and was bragging that his run-down Cessna was modified to run off of car gas, and he could do the round-trip run for under $15.  It costs more than that to drive to Kona.  The car he rented me had no tread left on the tires and I was literally driving on the steel belts.  Hopefully there was enough room in his little airplane for tires.  But I'm pretty sure he was fetching drinks and toilet paper.

This reminds me of a similar story run by CNN during the pandemic. And I found it.  Same town!  
From Costco to ToshCo. 

Only 15 bucks of gas for a round trip Cessna flight?  I seriously doubt that, even for a short flight.  Is there a landing strip at that Costco? 


https://www.cnn.com/2020/05/16/us/alaska...ng%20craft.

[garymatt]

I see that Kona Costco would lose Hilo side customers in that it just makes sense. It doesn't outweigh in my mind the very many customers in the higher population Hilo side who DON'T go to Kona often or ever.
I count as one and a real percentage of my food budget would go to Costco as it did 20 years ago on the mainland.

[terracore]

An East Hawaii Costco would likely render all other traffic congestion concerns in the area trivial by comparison.

If planned correctly, it might be better for traffic in the long run.  Think of people who go to multiple stores out of necessity chasing a meat sale one day, milk and bread the next, etc, and would consolidate all their shopping trips (and gas up their car) in a single costco run.  When I shop on the Kona side, Costco is literally the only store I go to.  Poor planning could make the traffic near the costco hell, but Target/Safeway/Walmart/etc would likely see less traffic.

All of this set aside, maybe Costco won't come to the East side.  But you know who is already invested on the East side?  Walmart.  Maybe we should be barking for a Sam's Club.

[terracore]

COSTCO HAS SPOKEN!

AND...

ANOTHER STORE ON OAHU!

https://www.kitv.com/news/business/costc...260fc.html

PEARL CITY, Hawaii (Island News)
Costco may be opening a new location in Hawaii – but this time it may be one of its newer type of stores that only sells home furniture, appliances and electronics, Island News has learned.

The Washington state-based retail giant already has eight warehouses in Hawaii including five on Oahu.  Costco recently filed a permits to renovate the former Sears Distribution Center off Kamehameha Highway in Pearl City into a "showroom."

The permit also calls for the change of use from church space to retail space. The estimated value of work comes out to just under $900,000.

Costco, which has more than 800 stores worldwide, plans to open a similar-type of store in Alaska in a former Toys R Us store, according to the Anchorage Daily News.  Island News has reached out to Costco and the owner of the property for comment Wednesday.

[HereOnThePrimalEdge]

Here’s another article about Costco’s new type of store:

https://www.thestreet.com/retail/costco-...e%20roster.