Costco plans to build a store in Lowell

Wholesale club giant Costco has plans for its first club in Northwest Arkansas and its second in the state. Lowell Mayor Chris Moore confirmed with Talk Business & Politics the large-scale development plan was filed with the city last Thursday (May 11).

Moore said the retailer is requesting variances regarding green space, the number of parking spaces and some utilities that would not meet city code as is. He said the earliest the variances and project could be up for approval would be June.

The original plan calls for the warehouse club to be located at the southwest corner of Concord and Pleasant Grove in Lowell near the Rogers city limits. At 160,979 square feet with 827 parking spaces and a fuel station, this would give Costco another Arkansas location after opening in Little Rock in mid-2021.

Moore said Costco is a destination retailer, and the additional retail expansion in Lowell is great news for the growing town that also recently added Einstein Bros. Bagels, Wendy’s and Starbucks.

“Our development team has worked hard recruiting more retail, and we will have a few more announcements coming,” Moore said.

The location is Lowell would put the warehouse club near the middle of the region and in a town that does not already not have a Sam’s Club. Amazon also chose Lowell for a distribution facility in Northwest Arkansas which opened in February 2022.

Costco is a formidable competitor to Sam’s Club, with the two retailers competing head to head for at least four decades. But this will be the first time Sam’s Club will have to compete with Costco in its home region. Sam’s Club has stayed out of Issaquah, Wash., the home of Costco. Sam’s Club closed three clubs in Washington state, including Seattle, in 2018, saying the clubs in Washington were simply too far from the company’s distribution centers which added to the cost of their operations.

“Walmart CEO Doug McMillon himself has acknowledged Costco’s formidable strengths. Soon, Walmart will have an unwelcome direct comparison in its own backyard. I don’t foresee a mass exodus of Sam’s members defecting to Costco. Some shoppers may make that either-or calculus, yet the bigger threat is higher-income shoppers that move to the area choosing Costco over Sam’s. In other words, Costco’s presence may have a bigger impact on membership growth in the area than on existing business,” said Carol Spieckerman, CEO of Spieckerman Retail.

She said Northwest Arkansas is growing, and younger, affluent shoppers who already have Costco memberships will also likely remain loyal. A smaller number of shoppers may choose to maintain memberships with both retailers, yet the popularity of Amazon Prime and a growing number of refined loyalty programs from other competitors will increase the pressure to pick and choose, she said.

“Even so, Sam’s has been a shining star in the Walmart portfolio as of late, and its continual improvement to membership programs, in-store shopping efficiency, private brand offerings, and more should serve it well over the long term. The key will be to differentiate from Costco rather than mimicking its moves so shoppers can justify multiple memberships or choosing Sam’s over Costco,” Speickerman said.

Costco has said it plans to open 14 U.S. clubs this year, with the first seven listed on the company website and the closest being a second club in Tulsa. Costco told Talk Business & Politics it does not comment on new clubs more than three months prior to their opening. It took roughly 15 months to go from announcement to opening the Costco in Little Rock, but that was during the midst of the pandemic. Costco operates 848 clubs around the world, with annual sales of $222.73 billion.

Sam’s Club operates as a division of Walmart. In the U.S., Sam’s Club operates around 600 locations, with 30 new clubs coming over the next couple of years. Sam’s Club had revenue of $73.6  billion in fiscal 2022.