Costco cash registers arent ringing yet.
But when the bulk-selling behemoth debuts in Fort Wayne, as expected, ripples will be felt across northeast Indianas retail landscape, experts say.
Bulk-goods outlets may especially have to contend with Costco, said Ken Stone, a retired Iowa State University economics professor.
I suspect that Costco will take a little bit of everybodys business, he said. Apparel and jewelry stores and traditional groceries will be affected some. There are a lot of similarities with Sams Club, but without question Costco has a more upscale image than Sams does and will attract upper-income customers.
Stone said theres only so many dollars to go around, so it stands to reason that some will feel (Costcos effect) more than others.
The Fort Wayne Plan Commission approved the up to $30 million retail warehouse last month, but Costco Wholesale Corp. leaders remain tight-lipped – even though the membership-only store has a purchase agreement with Menard Inc. for 15-acre site at the northwest corner of Lima and Progress roads.
Issaquah, Wash.-based Costco wants to build a 150,000-square-foot store at the former Seyfert Foods Inc. plant site that Menard owns.
The development would create 200 jobs – half of them full time, officials said. Costco has three warehouses in Indiana, two in Indianapolis – one on the northwest side and one in the Castleton area. The third Indiana warehouse is in Merrillville.
Jim McTevia, a Bingham Farms, Mich., retail consultant, said Costco draws upper- and middle-class households, but the stores dont always locate in those neighborhoods.
I bet Costco isnt going into one of the areas that would be considered (ritzy), he said. Thats because they do better in a more working-class environment.
But it wont be uncommon to find a Chevrolet next to a Lexus at a Costco parking lot, McTevia said.
These folks do an enormous amount of demographic research before they make a decision, he said, so if Costco is moving to Fort Wayne, its been well thought out.
But nothing is guaranteed in todays economic climate. In fact, the only thing consumers are loyal to these days is their wallets, said John McIndoe, senior vice president of marketing for researcher SymphonyIRI Group in Chicago. Most Americans visit at least five food places in an attempt to find the best deals, he said.
For example, one grocery may be known for having cheaper toilet paper, while another has the best price on dairy products.
Thats one of the things people have been doing since the economic downturn, McIndoe said. People are seeking to strategically leverage their costs.
The addition of Costco will just provide them with another option, he said.
Bring it on
Management at GFS Marketplace and Sams Club say Costco doesnt have them sweating. GFS has two locations in Fort Wayne, including one off West Washington Center Road near the proposed Costco.
A manager said GFS executives arent quite as concerned about Costco as they are with other competitors. One reason GFS, short for Gordon Food Service, is confident is because it feels many customers will balk at the annual membership fee Costco requires.
Fort Wayne resident Marilyn Garcia calls such charges ridiculous.
Thats why I dont shop at places like that, the retired factory worker said. I go to Gordons or someplace else.
Mary Klinger of Whitley County shopped at Jefferson Pointe recently. Though curious about Costco, the former school counselor is unsure whether she will change her retail habits.
Ive never been to a Costco, so I might want to go just to see what its like, Klinger said. I usually go to Sams.
Sams Club also is a membership-only store. The club, which is owned by Wal-Mart, sits on Lima Road just a few minutes from the proposed Costco. The proximity doesnt have Sams Club worried, company spokesman Mark Scott said. Sams Club has a head start on Costco, having been in Fort Wayne for more than two decades, he said.
Through that time we have built a fantastic base of members who appreciate the value of a Sams Club membership, Scott said. We have a long-standing commitment and relationship in Fort Wayne, and we expect that to continue no matter what other business or competitor chooses to locate in the area.
John McKay, executive vice president and chief operating officer of Costcos Northern/Midwest division,. said in a phone message the company would prefer to wait for all the approvals before commenting publicly about the project that could be completed by November 2013.
The Allen County Assessors Office lists the Menard property at $2.2 million. Commercial real estate broker Steve Zacher is assisting in the deal between Menard and Costco. The due diligence period includes water and sewer capacity checks, soil, wetland and related environmental tests.
Zacher said the process is moving along smoothly and he doesnt anticipate any problems.
The same cant be said about Yorktown, N.Y., where residents are waging a bit of a war over a proposed Costco in the community of 37,000.
According to the Journal News, which serves the lower Hudson Valley area in New York, two camps are sparring over a proposed Costco. One side is headed by business owners who favor of the development. The other consists of residents concerned with how a planned 151,000-square-foot warehouse store would affect the communitys way of life.
Things are so heated that the Journal News website quoted Costco spokesman Bill Primavera as saying about detractors that hes never seen a group so passionate in a negative way.
Costco got a warm reception in Fort Wayne.
City Councilman Tom Smith, R-1st, welcomed the company with open arms last month, saying it is exactly the type of business that paints Fort Wayne as a cool city on par with Indianapolis.
It adds to how Fort Wayne is portrayed by people who may be visiting or looking to move here, Smith said.