Costco sells a lot of items that you may not actually get to see in its stores.
Sometimes, like with the warehouse chain's line of coffins, there might be a sample Of one model for customers to see, while in others there will just be a brochure. That's true for some of the bigger-ticket items the warehouse club sells like furniture, appliances, and some larger electronics.
These are generally products where it's not practical to assume that members will be able to pick them up and bring them home themselves. The average person, even if they own a pickup truck, would struggle to get a couch, a refrigerator, or a washer and dryer set loaded and unloaded.
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Costco (COST) will, of course, sell you these items — its website has a reasonable selection of them — but customers can't see them. That might be okay for certain big-ticket appliances for which online reviews can be found, but even there people want to see the exact color and size to imagine what the item might look like in their home.
When it comes to furniture, well, that's a very hard purchase to get people to make when they can't touch and feel the item. People might buy a bed for a guest bedroom they never plan to sleep in sight unseen, but few would opt to buy furniture they plan to use regularly without getting to test it out.
Now, for the first time in 15 years, Costco plans to open a store solely dedicated to furniture and appliances.
Image source: Tim Boyle/Getty Images
Costco brings back a rarely-used concept
Most of Costco's 850 global locations are its classic warehouse model that sells food, household goods, and lots of other things. The chain has opened a handful of "Business Centers," in recent years, locations that cater to business needs that also welcome non-business members.
The chain tested this concept in Kirkland, Washington, near its Issaquah, WA, headquarters, but that location was closed in 2009. Since then, the company has not added or even talked about the concept.
Now, however, it plans to bring back the format in a former Toys R Us location in Anchorage, Alaska.
"You can touch and feel it and kick the tires, so it's a perfect opportunity to see what you can purchase," Christine Lasley, a Costco director of real estate development, told Anchorage Daily News.
The format may become a larger part of Costco's store base in the future, according to Lasley. She said the company also plans to open an appliance and furniture showroom in San Juan, Puerto Rico, and has plans to create additional locations beyond that one.
Costco has a steady expansion plan
Costco takes a slow and steady approach when it comes to opening new locations. That's something CFO Richard Galanti, who plans to step down from that position in March, talked about during the company's first-quarter earnings call.
"In terms of warehouse expansion, in the first quarter, we opened 10 locations including one relo, so a net of nine increases that those nine included eight in the U.S. and one in Canada. For the full year of fiscal '24, we estimate opening — we're planning to open 33 locations, including two relos, so for a net increase of 31 new warehouses. That would be up from 23 that we opened in fiscal '23," he shared.
In most years, the company opens between 20 and 30 new warehouses.
When Costco opens a new warehouse, especially in markets where it has a smaller footprint, it leverages the workforce from its existing stores.
"If you look at places like China or Spain, one of the challenges is you want — you like to be able to ideally bring over more than a handful of people from the existing location to the new one," he said. "It's a very hands-on operation. I think one of the things that we felt we mentioned that we had success when we first opened our first unit in Shanghai is we had at least 60 or 70 people moved there from Taiwan for promotions and for interactions, not just in the office and the buying offices, but even in the key, you know, supervisor and manager positions within the warehouse. And so, it takes a little longer, and -- but we're -- we're working hard at it. But it's a very hands-on experience."
