4,000 items, from wine to shirts, priced to sell
John Hielscher/Sarasota Herald-Tribune
Costco Wholesale Corp. workers on forklifts whisked through wide aisles this week, topping off 20-foot high stacks of merchandise, while others hustled to prepare the discount members club for an eagerly awaited Friday opening.
The nation’s third-largest retailer will swing open its doors at 8 a.m., stocked with $12 million worth of inventory at a newly constructed store at Sarasota Square Mall that replaces a shuttered Dillard’s department store.
If other Costco openings are any guide, the debut will spark a frenzy on Friday, complete with a jammed parking lot and lines at cash registers.
Already, shoppers have lined up outside the mall’s west entrance to become Costco members, which costs a minimum of $55 annually.
“It is the most successful membership drive in the Southeast and one of the most successful we’ve had domestically,” said general manager Scott Christensen, who declined to provide detailed member numbers.
The opening could be among the most eventful in recent Southwest Florida retail history, too, behind only the anticipated opening of the University Town Center luxury mall slated for late 2014.
That is because Costco, as few merchants do, inspires passion and devotion among its shoppers, with a mix of high-quality products, big-box prices and abundant selection.
Together with the planned Sept. 7 debut of eclectic grocer Trader Joe’s, Costco’s opening is expected to be the premier retail event of the year for Southwest Florida shoppers.
Loyal fans have looked forward to having a local store, with some Southwest Florida residents trekking for their Costco fix as far as Brandon, Clearwater or Fort Myers — the closest stores to Sarasota, each at least 40 miles away.
“People will drive distances to shop at Costco,” said Christensen, though he expects the store to draw shoppers primarily from Sarasota, Manatee and Charlotte counties. “It’s a destination shopping environment.”
Analysts agree. Costco’s cult-like following stems, in part, from selling some of the world’s best-known brands, said retail consultant Jeff Green.
“Costco is one of the most unique retailers in the U.S., as they appeal to all various demographics and lifestyles,” Green said.
“In fact, they transcend socioeconomic characteristics in that they offer a great combination of quality and price. Their meats, fish and bakery items are of the highest quality.”
Price-conscious customers are not the only ones jazzed about Costco’s opening, which has been in the works since early 2010.
More than 4,000 people applied for jobs at the store, which hired 90 locally and imported another 90 workers from among 400 veteran employees who asked to transfer to Sarasota.
The other 100 merchants at Sarasota Square — and mall owner Westfield Group — are excited, too, hoping to cash in on the throngs of Costco shoppers the new store is likely to attract.
Will it help neighbors?
The Sarasota store will also be different, in that it is one of just a handful of Costcos directly connected to an enclosed shopping mall, Christensen said.
But industry watchers say Costco’s presence may not benefit Westfield’s so-called “in-line” merchants as much as they hope.
“Most developers are finding that Costco certainly increases traffic to the center, but it does not seem to significantly help the other co-tenants,” Green said.
“I wonder if this is because Costco sells so much perishable stuff that a shopper simply cannot cross-shop for fear of the frozen food melting,” he added.
Costco has been stocking the 145,000-square-foot store — the company prefers to call it a “warehouse” — since July 23, Christensen said.
It will carry about 4,000 items, far fewer than the 80,000-plus found at a Super Target, but priced to sell at steep discounts.
Christensen expects the “20/80 rule” of retailing — 20 percent of the inventory will generate 80 percent of the sales — will apply in Sarasota as it does at some other Costco locations.
If the opening day’s inventory of $12 million turns over 15 to 20 times a year, a reasonable expectation, that would mean $180 million to $240 million in sales at the 8201 S. Tamiami Trail store.
In all, Costco generates roughly $90 billion in annual sales.
An adjacent gas station, located northeast of the store, opened late Tuesday. Regular unleaded was selling Wednesday for $3.54 per gallon, 8 cents lower than the average for the region, according to AAA statistics.
To keep prices down, Costco strips down its selling environment. Dress shirts are sold out of their original cartons. Merchandise is stacked on tables or on the wooden pallets the fork lifts carry in from delivery trucks.
In addition to fresh and frozen food, Costco sells clothing, electronics, appliances, hardware, sporting goods and housewares. Several hundred items, from food to clothing, are sold under its Kirkland Signature house brand, also.
It is the nation’s largest purveyor of wine, too. The Sarasota store’s 72 different vino offerings will be priced from $13.99 to more than $165 a bottle.
A 60-year-old bottle of Macallan single-malt scotch is also available — under lock and key — for $15,999.
“And it will sell,” said Christensen, who has been with Costco since 1983, most recently as manager of the company’s members’ warehouse store in Sandy, Utah.
Alcohol is not the only thing that can run to the high-end at Costco, though.
A fine jewelry section includes a round diamond solitaire ring that sells for $98,000. A table full of Prada and Salvatore Ferragamo purses is expected to sell out quickly. TV fanatics, meanwhile, can pick up a 90-inch, Sharp 3-D set for $9,999.99.
Merchandise aside, Costco has also differentiated itself by offering discounted tickets, such as two vouchers for local AMC Theaters, for $15.99, and a pair of adult admissions to Sarasota’s Ringling Museum of Art, normally $50, for $34.49 — a 31 percent price cut.
Christensen said he hopes to set up similar deals with local restaurants.
The store also has a pharmacy, optical service and photo shop, plus separate liquor and tire installation stores.
A food court, located between the store and the mall, will sell Costco’s signature $1.50 hot dog — the same price since it was introduced in 1985. It is open to everyone, not just members.
Costco’s Sarasota store, built at an estimated cost of $8.7 million, is nearly three times the size of Dillard’s, which closed in 2009.
Regular store hours are 10 a.m. to 8:30 p.m. Monday through Friday, 9 a.m. to 6 p.m. Saturdays and 10 a.m. to 6 p.m. Sundays. Anyone can browse, but you must be a member to make a purchase.
Based in Issaquah, Wash., Costco reported net sales of $87.7 billion for the 48-week period ended July 29, up 9 percent over the same period last year. In all, the company operates 438 stores in the U.S. and more than 600 worldwide.
The company ranks as the nation’s No. 3 retailer by sales, behind Walmart and Kroger Co., and No. 7 worldwide, according to the 2012 Global Powers of Retailing report.