S
samsonyuen
Guest
Wednesday » October 5 » 2005
Costco leaves no stone unturned
Kristin Goff
The Ottawa Citizen
Wednesday, October 05, 2005
'We know we are going to grow in Canada,' says Costco Canada country manager Louise Wendling. The shopping-club giant, which once figured 20 warehouse-style stores would cover the Canadian market, now believes Canada 'could easily support 100 stores,' she says.
When Costco Wholesale began doing business in Canada nearly 20 years ago, officials figured it could succeed only in markets with a half million people or more.
But as Costco Canada prepares to open its third Ottawa store in Kanata in mid-November, its 66th in Canada, it has much more ambitious plans for the retail strategy it once thought was limited to 20 warehouse-style stores in the country.
"I think Canada could easily support 100 stores," says Canada country manager Louise Wendling.
That could mean opening 10 to 15 more stores, including some in much smaller markets, over the next few years, she says.
The company, headquartered in Ottawa, also plans to move its Gatineau store to a larger location next spring.
"We're very aggressive in our approach," says Ms. Wendling. "We know we are going to grow in Canada."
Part of that optimism is based on the company's strategy of selling more to each of its 6.4 million shopping-club customers, who pay annual fees of $45 to $100 for regular or premium types of business or individual memberships as a requirement to shop there.
Even in this day of "everything under one roof" retailing, where you can buy ice cream at department stores and bank at the grocer, Costco Canada seems to be pushing things to the limit.
The club-shopping store sells bulk household and business staples in its warehouse-style stores, but also name-brand clothes, big screen televisions, computers, some appliances and a growing number of services, such as emergency roadside assistance and preferred rates for small-business payroll processing.
Its online store, which started this year, has added violins and trumpets, backup solar-power kits and expensive jewelry to its product mix. The most expensive diamond rings on its costco.ca website this week top $10,000 -- chump change compared with ian exquisite diamond ring that sold for $249,999 this year, its most expensive item by far.
That amazing wide range of products and services could seem like a wildly unfocused strategy. But it isn't, says Maureen Atkinson, a partner with retailing consultant J.C. Williams Group in Toronto.
"They know who their customers are and who they are not, and they are really sharply focused that way," she says.
"For that customer, they are going to do everything."
Because it charges membership fees, Costco shoppers are largely small-business owners and above-average income suburban families, and Costco is working to leverage that relationship in a big way.
It is a strategy that Wal-Mart uses in its Sam's Club stores, which have only started making inroads in Canada with a half-dozen stores in southern Ontario but are widely expected to roll out across the country.
Wal-Mart won't talk about its expansion plans in Canada. So far it doesn't have an online store in Canada, but its U.S. website also carries a wide range of products, from diamond rings to business supplies.
The two membership warehouse titans have battled for years in the United States, where Costco has fewer stores but has managed to achieve higher per-store sales by leveraging more sales per customer.
"We feel we can compete very well against them in Canada, as we did in the U.S.," says Ms. Wendling. Part of its strategy is to find "high quality" goods that the company believes will sell quickly and appeal to its higher income customers.
Despite its discount prices (Ms. Wendling says Costco's maximum markup is only 14 per cent), Costco pays employees $47,000 annually when they reach the top scale, usually after four or five years, she says.
Costco plans to hold a job fair from 10 a.m. to 3 p.m. on Oct. 14 at the Bell Sensplex to help fill the 200 new jobs the Kanata store will generate.
Employees at its new Kanata store, near Silver Seven Road, will start at $9.50 an hour, but pay progresses quickly based on cumulative hours worked, company officials said.
Costco, headquartered in Issaquah, Washington, doesn't separately report its Canadian financial results.
But officials confirm its sales top $8 billion a year, making it the fourth-largest retailer in Canada.
Costco clearly has one eye on the prospect of growing competition in Canada from Sam's Club. But its latest push into offering more and more services is aimed at more than simply building loyalty among its shoppers in response to Sam's Clubs, says Ms. Atkinson.
Offering services is a way for stores to ramp up sales, without having to physically expand their floor space. In the United States, the trend has taken off. Grocery stores, for example, are offering medical services, where nurse practitioners treat colds and common ailments, Ms. Atkinson said.
Loblaws' Presidents Choice Financial, which offers banking services along with groceries, is one example of the trend she expects to see sweep through the Canadian retail landscape soon.
"This trend will only be limited by the customer," says Ms. Atkinson. "At what point does the customer say, 'I'm not going to buy that in a grocery store?' "
Costco Canada might well be at the forefront of testing that proposition, following the lead of its U.S. parent.
Costco regular or "executive" members (who pay a higher membership fee) can already sign up for such things as emergency roadside service, telephone and Internet plans, and real estate services, which are offered through partnerships it negotiates for its members.
Car and home insurance are coming soon, officials say.
And by next summer, the retailer plans to offer "high quality" travel services and upscale packages -- such as cooking classes in Tuscany --at Costco prices.
Its business members can access payroll, credit card and debit processing financial services, among others.
"We like to have 10 or 12 services offered at any time where the price is great, and it really gives value to our membership," says Ms. Wendling.
Costco leaves no stone unturned
Kristin Goff
The Ottawa Citizen
Wednesday, October 05, 2005
'We know we are going to grow in Canada,' says Costco Canada country manager Louise Wendling. The shopping-club giant, which once figured 20 warehouse-style stores would cover the Canadian market, now believes Canada 'could easily support 100 stores,' she says.
When Costco Wholesale began doing business in Canada nearly 20 years ago, officials figured it could succeed only in markets with a half million people or more.
But as Costco Canada prepares to open its third Ottawa store in Kanata in mid-November, its 66th in Canada, it has much more ambitious plans for the retail strategy it once thought was limited to 20 warehouse-style stores in the country.
"I think Canada could easily support 100 stores," says Canada country manager Louise Wendling.
That could mean opening 10 to 15 more stores, including some in much smaller markets, over the next few years, she says.
The company, headquartered in Ottawa, also plans to move its Gatineau store to a larger location next spring.
"We're very aggressive in our approach," says Ms. Wendling. "We know we are going to grow in Canada."
Part of that optimism is based on the company's strategy of selling more to each of its 6.4 million shopping-club customers, who pay annual fees of $45 to $100 for regular or premium types of business or individual memberships as a requirement to shop there.
Even in this day of "everything under one roof" retailing, where you can buy ice cream at department stores and bank at the grocer, Costco Canada seems to be pushing things to the limit.
The club-shopping store sells bulk household and business staples in its warehouse-style stores, but also name-brand clothes, big screen televisions, computers, some appliances and a growing number of services, such as emergency roadside assistance and preferred rates for small-business payroll processing.
Its online store, which started this year, has added violins and trumpets, backup solar-power kits and expensive jewelry to its product mix. The most expensive diamond rings on its costco.ca website this week top $10,000 -- chump change compared with ian exquisite diamond ring that sold for $249,999 this year, its most expensive item by far.
That amazing wide range of products and services could seem like a wildly unfocused strategy. But it isn't, says Maureen Atkinson, a partner with retailing consultant J.C. Williams Group in Toronto.
"They know who their customers are and who they are not, and they are really sharply focused that way," she says.
"For that customer, they are going to do everything."
Because it charges membership fees, Costco shoppers are largely small-business owners and above-average income suburban families, and Costco is working to leverage that relationship in a big way.
It is a strategy that Wal-Mart uses in its Sam's Club stores, which have only started making inroads in Canada with a half-dozen stores in southern Ontario but are widely expected to roll out across the country.
Wal-Mart won't talk about its expansion plans in Canada. So far it doesn't have an online store in Canada, but its U.S. website also carries a wide range of products, from diamond rings to business supplies.
The two membership warehouse titans have battled for years in the United States, where Costco has fewer stores but has managed to achieve higher per-store sales by leveraging more sales per customer.
"We feel we can compete very well against them in Canada, as we did in the U.S.," says Ms. Wendling. Part of its strategy is to find "high quality" goods that the company believes will sell quickly and appeal to its higher income customers.
Despite its discount prices (Ms. Wendling says Costco's maximum markup is only 14 per cent), Costco pays employees $47,000 annually when they reach the top scale, usually after four or five years, she says.
Costco plans to hold a job fair from 10 a.m. to 3 p.m. on Oct. 14 at the Bell Sensplex to help fill the 200 new jobs the Kanata store will generate.
Employees at its new Kanata store, near Silver Seven Road, will start at $9.50 an hour, but pay progresses quickly based on cumulative hours worked, company officials said.
Costco, headquartered in Issaquah, Washington, doesn't separately report its Canadian financial results.
But officials confirm its sales top $8 billion a year, making it the fourth-largest retailer in Canada.
Costco clearly has one eye on the prospect of growing competition in Canada from Sam's Club. But its latest push into offering more and more services is aimed at more than simply building loyalty among its shoppers in response to Sam's Clubs, says Ms. Atkinson.
Offering services is a way for stores to ramp up sales, without having to physically expand their floor space. In the United States, the trend has taken off. Grocery stores, for example, are offering medical services, where nurse practitioners treat colds and common ailments, Ms. Atkinson said.
Loblaws' Presidents Choice Financial, which offers banking services along with groceries, is one example of the trend she expects to see sweep through the Canadian retail landscape soon.
"This trend will only be limited by the customer," says Ms. Atkinson. "At what point does the customer say, 'I'm not going to buy that in a grocery store?' "
Costco Canada might well be at the forefront of testing that proposition, following the lead of its U.S. parent.
Costco regular or "executive" members (who pay a higher membership fee) can already sign up for such things as emergency roadside service, telephone and Internet plans, and real estate services, which are offered through partnerships it negotiates for its members.
Car and home insurance are coming soon, officials say.
And by next summer, the retailer plans to offer "high quality" travel services and upscale packages -- such as cooking classes in Tuscany --at Costco prices.
Its business members can access payroll, credit card and debit processing financial services, among others.
"We like to have 10 or 12 services offered at any time where the price is great, and it really gives value to our membership," says Ms. Wendling.
