Can Costco Save America's Malls?

Costco talks about some interesting trends in this downturn. From Costco Wholesale Corp.'s FQ109 conference call:

For once, a positive sign for malls:

We continue to think that there’s plenty of opportunity in the US and Canada. We think that, our bet is if we’re in six or seven malls right now, and when I say we’re in malls, we’re usually in the parking lot with a breezeway entrance into the mall. In some instances, one example would be in Atlanta Cumberland Mall, they literally, the mall owner tore down I think it was the JC Penny and then we redid the parking lot and we have a gas station and a full Costco with no direct attachment other then a breezeway into the mall.

But no doubt we’re there because we bring destination shoppers of high end to that mall and its been a great location for us in terms of somewhere we weren’t invited to even come to the party. And so I think you’re going to see more of that going forward in many parts.

We think there’s some more real estate opportunities coming down the road over the next several months but that being said, trying to predict what’s going to happen eight, nine months from now is very hard right now.

TV’s, LCD's:

If you go onto Costco.com you can see that we’re selling two packs of flat screen televisions for less then $1500 for the both of them and so we’ve seen a lot of, notwithstanding what’s going on in the economy and with big ticket items we have taken an advantage of an opportunistic and going to vendors that have been stuck with inventory when other cancellations have occurred elsewhere and taking advantage of that.

For restaurants, grocers and meatpackers, demand for meat declines, prices too:

A year ago New York steaks were $7.99, they’re now $5.99, that’s all because of a lower demand… The only shift I’ve seen is is there’s been some shift from meat to poultry and things like that, but that’s not just in the last month, that’s been, and we’ve seen anecdotally in our food court we’ve seen a huge jump in take-home cooked pizzas.

People I think instead of eating out are coming to supermarkets and to Costco to have dinner.

This is suprising:

Just looking through the list I was surprised to see given all the craziness out there that alcohol was flat, beer and wine and spirits.

Parking its money elsewhere:

Somebody asked this morning were we investing in any of these negative return treasuries and the answer is no, we haven’t.

Comments

[doublebogey...:]

I'd never been to Costco before and thought I'd drive twenty miles and check it out, I suppose I'm just sn old fool but when they stopped me going in and wanted me to pay them 50 bucks for the opportunity to buy from their warehouse I turned around and went back to Krogers.

What a business model, pay me and I'll let you purchase my goods.
No thanks

2008 Dec 16 04:16 PM

[Sam Liu:]

i ride my bike or take the bus to costco. YOU'RE EXCEPTION AND OUTRAGE IS NOT APPRECIATED

On Dec 16 04:16 PM doublebogeymann08 wrote:

> I'd never been to Costco before and thought I'd drive twenty miles
> and check it out, I suppose I'm just sn old fool but when they stopped
> me going in and wanted me to pay them 50 bucks for the opportunity
> to buy from their warehouse I turned around and went back to Krogers.
>
>
> What a business model, pay me and I'll let you purchase my goods.
>
> No thanks

2008 Dec 16 06:29 PM

[ChuckyDee:]

After having been, and Still a member of Sam's Club, I also joined Costco. Just this week I saved $348 on a Canon HD Camcorder over what the same thing would have cost me at Best Buy, The $50 to get in is a CHEAP investment.

2008 Dec 16 09:01 PM

[Guero:]

I buy most staples @ Costco, much cheaper than the local grocery chain...at year-end I end up getting a rebate that more than covers the cost of an executive membership, plus the gas is the cheapest around.

2008 Dec 17 09:40 AM

[brokerinbir...:]

I shop at Costco mainly for the gasoline. It's usually 20 cents lower than the Shell, BP or Chevron. There are a lot of product lines Costco sells cheaper than tradiotional retail stores, even cheaper than Wal-Mart. Basic membership is $50 a year, but member's satisfaction is unconditionally guarateed. If you don't think you got a good deal at year's end just ask for the refund. The same goes for any of their products. And the quality of the products I have always found very high. You can buy the store brand (Kirkland) or the same name brands found at full-price retailers, but they are still cheaper than at the retailers. If someone like Doublebogeymann expends so much in gasoline that marginal savings would be lost, then I agree with him. Otherwise, for poeple living near a Costco, it's worth the membership fee.

2008 Dec 17 10:21 AM

[SJD:]

VERY high quality outfit where people actually like working there.

2008 Dec 17 10:58 AM

[Ed Samiljan:]

Costco has more retail integrity than any retailer I have ever seen. Consistently, without all the b.s. marketing of their competitors, they offer first quality products at better than competitive prices. Have a problem? They take care of it without hassle.
Incidentally, try the roast chickens for 5.50. Better quality and the best tasting in town. And their blueberry muffins. They are worth the membership fee!

2008 Dec 17 11:30 AM

[Still Renting:]

I've been a member for over 10 years. I pay a $100 annual fee ("golden membership" or whatever) and get a couple hundred back every year. With the new Costco Amex card, it is increased significantly. We're empty nesters now and STILL love Costco.

The annual fee keeps out the riff-raff.

I'm not kidding.


On Dec 16 04:16 PM doublebogeymann08 wrote:

> I'd never been to Costco before and thought I'd drive twenty miles
> and check it out, I suppose I'm just sn old fool but when they stopped
> me going in and wanted me to pay them 50 bucks for the opportunity
> to buy from their warehouse I turned around and went back to Krogers.
>
>
> What a business model, pay me and I'll let you purchase my goods.
>
> No thanks

2008 Dec 17 11:50 AM

[wallyjm:]

cosco is the best in all respects. if somthing doesn't work a quick refund with no hassle, food all high quality. paper towells under kirkland name the best there is and cloths with brand names really cheap. fifty buck membership is a bargain. outside they offer the best hot dogs and a drink for $1.50!

2008 Dec 17 01:32 PM

[specks:]

I got gift cards from my employer to shop there. Once I converted bulk price to regular supermarket prices, I got a reality check. Most items are just as expensive but only costco charges an entry fee! So thanks but... no thanks!!

2008 Dec 17 06:38 PM

[vet:]

I get my $50 back by just eating the free food samples at COSTCO. However, when you factor in the cash back savings from using the COSTCO/Amex card, the discounts AND the high quality products and service, it's a no-brainer.

2008 Dec 17 06:49 PM

[maskerfamily:]

If you just want to try it out to see if you like it, they will HAPPILY let you shop there the first time for FREE!!! All you have to do is go to the Cust. Serv. Desk and ask for a Day Pass. I've been a member for over 20 years and still love it! The return policy is the best of ANY retail store that I've ever shopped at in my life. They have changed one thing about it but I'm happy that they have. It used to be that they would accept anything for any reason, even a year latter. You didn't even have to have a reciept. Now you can still return anything, even months latter. But you "only" have THREE MONTHS to return an electronics item, even computers and T.V.'s!!! (I say only as a joke, most stores you only get 30 days and if you have used it you are lucky to get that and you only get store credit in most cases). Best buy is really bad, if you happen to have opened any vidio game, software, or often times any kind of electronics than there is a good chance that you might not even get store credit. Just in case you are wondering, yes I have been BURNED by Best Buy too many times in the past.

2008 Dec 19 01:45 AM