News   Nov 12, 2024
16 Storey Tower Proposal South of Warden Station Grows to 27 Storeys
 607     0 
News   Nov 12, 2024
News Roundup for November 12, 2024
 504     0 
News   Nov 12, 2024
Financial Core Nightlights
 580     0 

Costco

lenaitch said:
On reflection, I think I was thinking of retail mixed in with lower density residential, like the corner store of old.

For a company with an entire business model of high volume, discount sales ( 'the $500 store', which these days might be a little dated), allows them to make high volume purchases, it would be interesting to see the fit. A wholesaler/retailer that typically moves a lot of product also needs the facilities to receive a lot of product (tractor trailer access, loading docks, etc.).
Click to expand...
Getting product into the store is not the problem. It is the logistics of getting it out in customer shopping baskets.
 
afransen said:
Getting product into the store is not the problem. It is the logistics of getting it out in customer shopping baskets.
Click to expand...
I still think it's a potential problem. When the foundational business model is 'discount bulk', all that bulk has to be delivered. I don't know their logistical model - whether they are stocked throughout the day, night only, etc. but if the store moves a lot of bulky stuff out the door, it has to come in. A parade of large trucks or transports, particularly if at night, might be an issue for residents. There is also the issue of loading docks and access. If the company launches smaller format stores perhaps, but that might come at a cost to the consumer.

The one advantage that Ikea has it all or most of its products are flat-pack.

(CNBC Image)

1675099499704.png
 
lenaitch said:
I still think it's a potential problem. When the foundational business model is 'discount bulk', all that bulk has to be delivered. I don't know their logistical model - whether they are stocked throughout the day, night only, etc. but if the store moves a lot of bulky stuff out the door, it has to come in. A parade of large trucks or transports, particularly if at night, might be an issue for residents. There is also the issue of loading docks and access. If the company launches smaller format stores perhaps, but that might come at a cost to the consumer.

The one advantage that Ikea has it all or most of its products are flat-pack.

(CNBC Image)

View attachment 453258
Click to expand...
There are large format retailers downtown that can receive if not 53' semi trailers, at least 40' trailers. I would think a busy costco would be maybe 5-10 of these per day, likely with a number of dock doors. There are typically noise curfews given the condo residents downtown necessitating daytime deliveries.
 
lenaitch said:
I still think it's a potential problem. When the foundational business model is 'discount bulk', all that bulk has to be delivered. I don't know their logistical model - whether they are stocked throughout the day, night only, etc. but if the store moves a lot of bulky stuff out the door, it has to come in. A parade of large trucks or transports, particularly if at night, might be an issue for residents. There is also the issue of loading docks and access. If the company launches smaller format stores perhaps, but that might come at a cost to the consumer.

The one advantage that Ikea has it all or most of its products are flat-pack.

(CNBC Image)

View attachment 453258
Click to expand...
Isn't that the same way grocery stores receive product? It arrives packaged up like what is on the cart in that photo, but then they unpack it in the back to sell as individual items on the shelves, but it all still arrives at the store the exact same way.
Costco also does sell a lot of items individually too only they are mega-sized. You don't have to buy a whole pallet of Kirkland brand olive oil; instead you can buy a single very large two or four litre container of it.

So this ultimately boils down to how much sales are you doing. Are they trying for 1,000 customers per day, or are they trying to squeeze through 10,000 customers per day [numbers are made up, but the 10x scale is the idea] like a suburban Costco would have but in a much smaller space?
 
Last edited:
afransen said:
There are large format retailers downtown that can receive if not 53' semi trailers, at least 40' trailers. I would think a busy costco would be maybe 5-10 of these per day, likely with a number of dock doors. There are typically noise curfews given the condo residents downtown necessitating daytime deliveries.
Click to expand...

Jonny5 said:
Isn't that the same way grocery stores receive product? It arrives packaged up like what is on the cart in that photo, but then they unpack it in the back to sell as individual items on the shelves, but it all still arrives at the store the exact same way.
Costco also does sell a lot of items individually too only they are mega-sized. You don't have to buy a whole pallet of Kirkland brand olive oil; instead you can buy a single very large two or four litre container of it.

So this ultimately boils down to how much sales are you doing. Are they trying for 1,000 customers per day, or are they trying to squeeze through 10,000 customers per day [numbers are made up, but the 10x scale is the idea] like a suburban Costco would have but in a much smaller space?
Click to expand...

You both could well be right. I'm just wondering how well they would fit into a mixed use setting with their current business model. True that you don't always have to super-size everything, but they do sell a lot of large format products, and people gobble them up. A hundred people spending $100/visit vs. $300 hits the bottom line and basically turns them into Walmart. People might argue 'well why wouldn't they'; that's a business decision for them to make. The same reason there isn't an Ikea store north of Vaughan or only one in all of Atlantic Canada.
 
Agreed. This is why the challenge of a Costco in an urban context is that they need customers to schlep huge purchases to distant homes in cars. A condo dweller arriving by bike is not going to be in their key demo. A condo dweller won't buy a year supply of paper towels because it is 5% cheaper. So their basket size drops, they need more traffic and/or higher prices to cover urban rents. More traffic is a stretch as Costco tends to only expand when they thing the catchment area is saturated.

Beyond that, I think Costco's strategy is inherently kind of niche. They only want to sell a subset of grocery and associated products to a specific demographic slice. There are 'costco people' who conform their consumption patterns around what costco sells, but many of their customers do 'stock up' shops there every 2-3 weeks as a supplement to a full service grocery store.
 
Last edited:
lenaitch said:
You both could well be right. I'm just wondering how well they would fit into a mixed use setting with their current business model. True that you don't always have to super-size everything, but they do sell a lot of large format products, and people gobble them up. A hundred people spending $100/visit vs. $300 hits the bottom line and basically turns them into Walmart. People might argue 'well why wouldn't they'; that's a business decision for them to make. The same reason there isn't an Ikea store north of Vaughan or only one in all of Atlantic Canada.
Click to expand...
I go to Costco for the free samples. o_O;)
 
I believe there are quite a few urban Costcos around the world, including in NYC and Japan. I think actually if they opened one downtown in Toronto, it’d be heavily trafficked, considering that at least anecdotally, one of the primary reasons people eschew Costco memberships downtown is due to a lack of proximity.
 
You must log in or register to post here.

Back
Top