Costco to Enter Twin Cities Market

Costco Wholesale Corp., the nation’s largest wholesale club operator, expects to open its first warehouse store in the Twin Cities market late this fall, and eventually plans to have three or four stores here. The Issaquah, WA-based retailer will soon start building a 145,000-sf store in St. Louis Park on a 12-acre site near the Park Palace Plaza shopping center at Minnesota 100 and Interstate 394. St. Louis Park city officials gave final approval to the project in July.

“We’re scouring the market for sites,” Jeff Brotman, Costco’s chairman, told GlobeSt.com. Costco’s main competitor in the Twin Cities will be Sam’s Club, which has six locations in the Twin Cities and is looking at opening a seventh, according to Mike Scott, a retail broker with Bloomington, MN-based United Properties.

Costco averages about $100 million in sales per outlet, with a little more than half of that from food, Brotman says. Costco’s decision to enter the Twin Cities comes at a time when Target plans to introduce its own combined food-discount department store concept in Shoreview, and the owner of Rainbow Foods is expected to sell that chain.

This is the Costco’s second attempt to establish a presence in the Twin Cities. The chain had opened a store in Minneapolis in 1986 and another in St. Louis Park in 1987. But in 1988, the company closed both stores, citing large losses — apparently the wholesale club concept hadn’t yet caught on in the Midwest.

Costco’s 325 stores (233 in the U.S.) range from 130,000 sf to 160,000 sf. Sales per store in 1999 were $101 million in the U.S., compared with $54 million per store for Sam’s Club, its biggest rival. The retailer has 13.7 million members, and posted 1999 sales of $27 billion.