Costco to snap up property while prices are low-CEO
By Teresa Carson
PORTLAND, Oregon (Reuters) - Costco Wholesale Corp, the No. 1 U.S. warehouse club, plans to take advantage of the distressed real estate market to open stores this year, even as sales decline because of the recession, its chief executive said Thursday.
"We're getting better deals on real estate," said Costco's CEO Jim Sinegal at a media event in Portland, Oregon. "People who didn't want to talk with us about shopping center sites now want to talk with us."
Costco, based in Issaquah, Washington, will open stores at its normal rate of 25 to 30 per year "depending on real estate," Sinegal said.
The company's 553 low-price warehouse club stores appeal to thrifty consumers, but Costco's customers are switching to more basic goods to save even more money.
Earlier this month, the company said February sales at clubs open at least a year fell 3 percent from a year ago.
"The value concept we have should hold up well in this economy," Sinegal said. "Customers are clearly moving toward more basic items and that will probably continue to be the case."
Costco, the country's fifth-largest retailer, is tweaking its product mix to keep up with the rising demand for economy.
"We normally carry 600 thread count sheets, and they are great sheets," said Sinegal. "We just put in a 300 count, and it blew off the shelves. It is half the price of the 600 count. We were kind of hesitant about it, but clearly customers are looking for those types of values."
Costco, known for its colossal-sized grocery items, is also discussing how much bigger its products should get. For example, the company is examining whether to keep its 40 pound box of laundry soap or switch to a 50 pound box. Larger sizes are often more economical than smaller versions of the same product. (Reporting by Teresa Carson; Writing by Bill Rigby; Editing by Toni Reinhold)