Canadian Retail Thread

[SSLL]

From: http://www.retailingtoday.com/magazine/story.cfm?ID=3583
_________

Costco opens in downtown Vancouver

November 2006
By Doug Desjardins

Costco opened its first urban store in Canada Nov. 10 on the bottom floor of a high-rise residential development in downtown Vancouver. It’s Costco’s second urban store in North America and could serve as a model for other urban markets.

“If we can do it here, we can see where it could have applications in other cities like Manhattan and Chicago,” Costco ceo Jim Sinegal told Retailing Today.

The 128,000-square-foot store is about 10,000 square feet smaller than a standard warehouse and has a unique look created by dozens of load-bearing pillars scattered around the store. The pillars, which take up close to 3,000 square feet of floor space, support a parking garage and high-rise towers being built above.

Parking is provided on two levels below the store, which is at street level across from the GM Arena, home of the Vancouver Canucks NHL hockey team. Extra-large elevators are outside the entrance to accommodate shoppers heading down to the parking lot with heavy loads.

Costco chose Vancouver in part because of its demographics. The downtown area has one of the heaviest residential populations of any city in North America. And that built-in customer base will be supplemented by a four-tower, high-rise development above the store that will eventually be home to close to 900 luxury condos, with the first two towers due to open in fall 2007.

The merchandise mix is typical of a standard Costco with a heavier focus on food. Catering to local tastes, the food department has a large selection of cheese and fish along with an extensive array of prepared meals. “With so many people living within walking distance, we think they’ll be a popular item here,” said Sinegal.

Though the store is expected to attract throngs of customers from the downtown area, Costco expects it to perform even better with business members. “We’ve found that to be the case with our store in San Francisco, which is one of our busiest stores, and that’s one of the reasons we chose this site,” said Sinegal. “You have a lot of small businesses, shops and restaurants down here.”

The new store isn’t likely to impact others in the area, since Costco’s locations in Richmond and Grandview are about a 20-minute drive from downtown Vancouver.

Costco’s store in San Francisco was its first attempt at operating in an urban area and, like Vancouver, has a two-level parking garage attached to the store. But that warehouse is a stand-alone and doesn’t have a residential complex built into the site, which makes Vancouver unique for Costco and for most retailers experimenting with urban concepts.

Sinegal said Costco will be looking for opportunities in other cities if Vancouver works out as expected. Though it’s relatively new at operating urban stores in North America, it does have some experience overseas. “We’ve dealt with similar issues with our stores in Japan and Taiwan and I think those experiences helped us,” said Sinegal.

Costco is part of a growing list of big box retailers experimenting with urban formats. Wal-Mart opened its first Urban 99 store in Tampa, Fla., two years ago and opened another in White Plains, N.Y., this summer. Those stores have a footprint just under 100,000 square feet and carry an edited selection of products.

The Home Depot has taken a similar approach to entering dense urban markets with a mix of formats that includes multi-level stores. It entered New York City in 2004 with two urban prototypes and is due to open another in 2007. The only difference with Costco is that it’s managing to open stores that are about the same size as a standard warehouse with a full selection of merchandise.