In the past, Costco has opened the occasional club in a mall. Now, however, the company is making a push to put its stores in shopping center spaces that typically house department store anchors.
Jeff Brotman, co-founder and chairman of Costco, recently told Dow Jones Newswires, the warehouse club operate is looking "to accelerate" mall store openings.
Recently, Costco signed an agreement with The Westfield Group to open clubs at malls in Los Angeles, Sarasota, Florida, and Wheaton, Maryland.
Jim Sinegal, CEO of Costco, said in a press release, "We are pleased to partner with Westfield and look forward to providing great value and convenience to current and future Costco members in three vibrant markets. It is especially exciting to join new communities such as Sarasota and Wheaton, as well as to join forces with Westfield in Los Angeles -- right in the heart of the San Fernando Valley's Warner Center business district."
Costco's move into malls has been made easier because space has opened and lease terms have become more attractive in recent years as other big box retailers have closed stores.
Still, Mr. Brotman told Dow Jones, "Our preference is to never be in a mall or by a mall. But in metro areas there just is not that much land, and we still want to expand."
Randy Brant, executive vice president at mall owner Macerich Co., said Costco is an attractive tenant for shopping center operators.
"Their average store does over $100 million a year in sales and there aren't many department stores that can do that, especially in this environment," Mr. Brant told Dow Jones. "The only downside is typically a customer making large purchases at Costco will get in their car and head home."
Discussion Questions: What is your assessment of Costco's move into mall locations? Is this a healthy prospect for malls? Is this a strategy that would work equally well for Costco's rivals?