Going after Meijer and Sam's Club
by Sally Mitani
On opening day at Costco, Jim Dolgas from marketing was making his way down the long line of customers who had queued up to buy memberships. He and several assistants were handing out applications and clipboards and extolling the benefits of an executive membership over a regular $55/year membership (mainly the opportunity to earn cash back, in a formula that sounded so impossibly beneficial that most customers seemed to instinctively feel they were missing the catch), and plugging the Costco American Express card, the only credit card Costco takes. (Debit cards and checks are welcome.) Though Costco accepts any AmEx card, the Costco AmEx confers another raft of special benefits, like 3 percent off on gasoline.
It was a steamy day and Costco employees were also dispensing bottles of water, as well as tiny cups of what started out as ice cream but was quickly rendered by heat to something more like a smoothie.
Dolgas, asked to hazard a guess on how many people would shop that opening day, said "easily upwards of five thousand, and we don't know how many are staying away because it's opening day." Dolgas came from the Brighton store and says that on a typical weekday in Brighton, 350 to 400 people walk through the door every half hour.
Metrics are big at Costco--every dollar and every customer are tracked carefully because, according to Dolgas, "we're a very small-margin business."
Here are some more metrics. It's the second-largest retailer in the U.S. (The first is Walmart.) "But," interjects Dolgas, "Costco is consistently the number-one-rated retailer by Consumer Reports!" Costco is the seventh-largest retailer in the world. There are 435 Costco warehouses in the U.S., and it took Ann Arbor a surprisingly long time to get one. The problem seems to be that while everyone wants a Costco in their area, no one wants one in their backyard. This one was in the works for a few years, as Pittsfield Township hammered out the zoning issues.
Before that, Costco had its eye on a Scio Township site and withdrew graciously when neighboring businesses mounted a counteroffensive.
A lot of retail watchers are speculating about the changes Costco will bring to the local commercial ecosystem. Dolgas is quite frank about what Costco itself worries about: Sam's Club and Meijer. He says that's why Costco's AmEx credit card will give you 3 percent back on gas at any gas station except Meijer and Sam's Club.
Though you can't shop at Costco without a membership, Dolgas clarifies that you're welcome to go in and look around.
Costco, 771 Airport Blvd., 213-8010. Mon.-Fri. 10 a.m.-8:30 p.m., Sat. 9:30 a.m.-6 p.m., Sun. 10 a.m.-6 p.m. www.costco.com
[Originally published in August, 2012.]