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Should Costco Open More Showrooms and Expand Into the Last 3 States?

Costco, known for its bulk bargains on groceries, household goods, and more, is shaking things up. Forget browsing online for furniture and big appliances; soon customers can see them in person at Costco’s latest venture: a dedicated furniture showroom.

Located in an old Toys”R”Us building in Anchorage, Alaska, this showroom aims to make shopping easier for Costco members. Christine Lasley, a Costco director of real estate development, mentioned in the Anchorage Daily News that this move is all about meeting member needs and helping businesses buy in bulk.

This new showroom will give shoppers “a chance to see firsthand what they can buy for shipment. They can then order items online for shipment to their residences or businesses.” According to Lasley, “You can touch and feel it and kick the tires, so it’s a perfect opportunity to see what you can purchase.”


This isn’t the first time Costco has experimented with this concept. The company tried something similar called Costco Home in Kirkland, Washington, near its headquarters, but the two experimental stores, which were dedicated solely to home furnishings, closed in 2009. That decision, announced on April 2, came as a result of lease obligations nearing their end and strategic adjustments prompted by economic shifts of the time.

Former CEO Jim Sinegal described the stores as “a valuable experiment” but explained that they were unsustainable. Costco decided at the time that “the single-format Costco Home concept does not fit into our long-term expansion plans.”

According to Lasley, the new showroom project “is in the process of seeking and receiving permits from the municipality.” She did not share an expected completion date, noting “uncertainties with timelines to receive permits for modifications.”


Lasley also added that Costco is “working on creating additional showroom warehouses.” It already runs a showroom for appliances and furniture in San Juan, Puerto Rico.

People on Reddit are buzzing about this concept. Some think it’s perfect for Alaska’s remote location, while others are curious to see if it’ll catch on elsewhere. If it does, it could change the game for Costco and shoppers everywhere.

Despite the retailer’s expansive reach — with almost 600 locations in the U.S. alone and around 861 altogether worldwide as of 2023 — there remains a notable absence of standard Costco retail warehouses in three states: Rhode Island, West Virginia, and Wyoming. This seems to be due, at least partially, to the smaller populations in these states. According to Tasting Table, “Costco strategically evaluates potential locations based on factors like population density, market demand, and logistical feasibility.”

Per a study published by Medium, Costco typically prioritizes not only population density but also projected population growth, employment, and median household income within a 20-minute drive of the possible warehouse location. This is why the company has put so many stores in California, Texas, and the area between New York City and Washington, D.C.

Food Republic noted that there are plans for a possible opening in Rhode Island, but nothing has been confirmed yet.

As Costco continues its nationwide expansion, including its new showroom in Alaska, the anticipation builds in these three states. Potential customers eagerly await the arrival of Costco, recognizing the potential for economic growth, enhanced consumer options, and, perhaps most importantly, the sense of community that comes with welcoming such a beloved retailer into their midst.

Discussion Questions

Do you think Costco should open more showrooms for furniture and appliances, or would this strategy only succeed in more remote locations like Alaska?

Considering the unique challenges of geography and consumer demographics, what distinct market entry strategies should Costco adopt to expand into Rhode Island, West Virginia, and Wyoming compared to more densely populated regions?

What are the broader economic implications of the absence of major retailers like Costco in Rhode Island, West Virginia, and Wyoming? How can stakeholders collaborate to address these disparities and foster sustainable retail development in these regions?

Poll

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BrainTrust

"This showroom concept sounds like an excellent idea for Costco. It allows them to reach customers without having to invest in in-store inventory."
Avatar of Gary Sankary

Gary Sankary

Retail Industry Strategy, Esri


"Costco is a destination store as is — it’s not really a quick trip kind of place by nature of what it sells, so making it even more of a destination makes sense."
Avatar of Melissa Minkow

Melissa Minkow

Director, Retail Strategy, CI&T


"Costco has select furniture items in its regular stores, but a showroom dedicated to furniture makes a lot of sense, especially given Costco’s superior merchant capabilities. "
Avatar of David Spear

David Spear

VP, Professional Services, Retail, NCR