The Washington Post

Costco drives deeper into Washington area

Demolition was under way in December at the site of an empty Hecht’s at the Westfield Wheaton mall. A Costco is planned for the site. (Michael S. Williamson/The Washington Post)

Discount retailer Costco Wholesale is making greater inroads into the Washington area with plans for a new store on a 12-acre tract in Alexandria, one of three locations in the works in the region.

Costco stands to gain grocery market share, albeit marginal, at a time when traditional players, like Food Lion and Superfresh, struggle to compete in a changing industry. Drug stores and big-box chains are muscling in on supermarkets with a wider selection of groceries. Value-oriented merchants, such as Costco, still hold a profitable stake in the industry and are finding room for growth.

Compared to Wal-Mart, which is opening more than a dozen new stores in the Washington area, Costco’s local expansion might seem minor. But given the sheer size of a Costco, at an average 148,000 square feet, and some of the locations, the growth is significant.

Costco, for instance, struck a deal in December to open its first location in the District at the Shops at Dakota Crossing, a 42-acre retail destination in Northeast.

At the Westfield Wheaton mall in Montgomery County, Costco is slated to open a location in the latter half of this year. Meanwhile, the Alexandria store has a target opening of spring 2013. The new additions will bring Costco’s total portfolio of stores in greater Washington to 19, up from 16.

According to David Ward, president of brokerage firm H&R Retail, which represents Costco locally, the retailer is scouring the market for additional sites. He declined to disclose locations.

Ward said Costco’s chairman, Jeffrey Brotman, is involved in all of the site selections, and is very deliberate in his choices. Costco looks for locations that can accommodate plenty of parking spaces as its bulk-buying customers typically drive out to its stores.

“It’s difficult finding the real estate that can accommodate the footprint of the stores,” Ward said. “If you look at the stores Wal-Mart is planning [in D.C.], they’re all in Northeast and Southeast, where they can find larger parcels of land.”

The average annual household income for shoppers at Costco is $96,000, and. Costco is coming off of a banner year. Its December same-store sales, for instance, jumped 9 percent year over year to $10 billion.



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