Costco Lakewood: Rising in Lakewood Center “We are reinventing the concept of the regional shopping center,” said Art Coppola, President and CEO of Macerich, the mall's owner. "This is an important new hybrid model with great potential . . .”
The new Costco Wholesale store has opened. Click here to see photo gallery showing the buioding of the Lakewood Costco store.
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Lakewood Center announces Costco as latest addition to mall
(Originally published September 2007) Costco will become the fourth anchor store at Lakewood Center making it the single largest enclosed shopping center in the Los Angeles metro area. The move is a first for Costco in Southern California.
Lakewood Center's announcement
The construction of a 160,000-square foot store was completed in the first quarter of 2009. Simultaneously being developed is an outdoor retail plaza 60 feet wide and about 300 feet long.
“This announcement is good news for Lakewood shoppers,” notes Mayor Diane DuBois. “They will soon have the convenience of shopping at the nation's most successful membership store. It’s good news for Lakewood Center, too. In every stage of its remarkable growth since the 1970s, Lakewood Center has been a leader in delivering what shoppers want most: value, quality, convenience, and a diversity of choices.”
|Gallery of photos shows progress on Lakewood’s newest retail addition |
The new Costco store goes from empty lot to structural steel in photos taken since the start of the construction process. Lakewood Online will follow the store’s progress until its opening – slated for mid-February 2009. More...
City officials believe that the sales tax generated by the new store will far surpass the revenue lost by the closing of the Robinsons-May store. Sales tax revenue makes up 25 percent of the city’s General Fund, which pays for law enforcement programs, repaves neighborhood streets, and supports Lakewood's nationally recognized park and recreation programs.
City officials also note that the Costco development is occurring without any city or redevelopment agency assistance.
Statement by Mayor Diane DuBois
The Macerich Company’s announcement that they have secured a Costco for Lakewood Center is good news for Lakewood shoppers, who will soon have the convenience of shopping at the nation's most successful membership store. Costco will introduce a fresh experience and an important new shopping option for our residents.
The Costco development is occurring without any city or redevelopment agency financial assistance.
Lakewood Center’s ability to reinvent itself has been its perennial strength under the Macerich Company banner since the mid-1970s. Today’s announcement confirms that Lakewood Center will remain one of the largest regional shopping centers in Southern California. In every stage of its remarkable growth, Lakewood Center has been a leader in delivering what shoppers want: value, quality, convenience, and a diversity of choices.
We believe that the sales tax generated by the new Costco will far surpass the revenue lost by the closing of the Robinsons-May store by Federated Department Stores. That's good news for the city's General Fund, which pays for law enforcement programs, repaves our neighborhood streets, and supports Lakewood's nationally recognized park and recreation programs.
Costco’s projected sales also confirm that previous efforts to extend the mall’s east wing were a success. Those efforts kept the Lakewood Center competitive when other malls lost their edge and their sales stagnated or declined.
With Lakewood Center's strong fashion retailers, four general merchandise stores (Macy’s, Mervyn’s JCPenney and Target), its 32 restaurants and casual dining locations, and its many volume retailers, there are very few reasons why any shopper should shop outside of Lakewood.
Who is Costco?
Costco was founded with a single store in Seattle in 1983. It now has more than 500 stores, including 371 in the United States but also in Canada, Britain, South Korea, Taiwan, and Japan. Wal-Mart, by contrast, has about 640 Sam's Clubs in the United States and abroad. For fiscal year 2006, store sales totaled $60 billion.
- Costco is 32 on the Fortune 500 list of the nation’s largest companies
- Costco is the leading membership warehouse retailer in the United States. (Costco and Price Club merged in 1993; Sam’s Club is ranked second in total sales.)
- Costco is the fourth largest retailer in the United States.
- Costco today has 26.7 million household members (49 million cardholders) compared to only 17 million household members in 2001.
Who are Costco shoppers?
The average household income of Costco customers is $75,000, with 31 percent earning over $100,000. Those customers are devoted to the Costco shopping experience, averaging 22 trips per year. About 30 percent of Lakewood families are current Costco members based on a community survey conducted by the City of Lakewood.
According to Costco's spokesman, "Lakewood has a great combination of things we look for - a vibrant residential marketplace with very good incomes and also a very vibrant business community."
What is Costco’s position in the Lakewood-area retail marketplace?
Costco is expanding to increase its market share within trade areas where it already has a presence. Lakewood could be viewed as an infill area, given the location of three Costco stores within seven miles: Signal Hill-4 miles, Norwalk-5 miles, and Cypress-7 miles. Southern California boasts 65 of Costco's 107 California locations, more than any other region in the United States.
Will Costco reuse the existing building on its site?
Macerich will make the site available for the construction of a store that conforms to Costco’s single-story floor plan. (The existing building, formerly owned by Federated Department Stores, is two stories. It will be demolished.)
The 159,000 square-foot Costco store is tentatively scheduled to open in fall 2008.
What does this development mean for the mall?
The ending of the Robinsons-May brand confronted the Macerich Company with the loss of a major anchor retailer. (Anchor stores are the underpinning of every regional shopping center. Their size and popularity determine the long-term viability of a mall.)
However, this loss also presented an opportunity for Macerich to evolve Lakewood Center further. In the past decade, Macerich has created a significant volume merchandising presence at Lakewood Center with the addition of Home Depot, Best Buy, and Target at what had been a traditional mall. In addition, the already strong restaurant sector in and around the center has been expanded.
The 2.86 million-square-foot Lakewood Shopping Center is anchored by distinguished anchors --JCPenney, Macy’s, Mervyn’s, Target and now Costco and is joined by more than 250 specialty shops and restaurants.
How will a Costco compare to a department store as a sales tax generator?
Warehouse membership stores generate sales that are significantly greater than traditional department stores, and city officials anticipate that Costco's annual sales will exceed annual sales at the former Robinsons-May store by a very large margin.
Warehouse stores can be expected to produce total annual sales above $150 million of which about $95 million would be taxable sales.
Sales tax revenue from a warehouse store should be about $860,000 a year. (A typical department store generates about $230,000 in sales tax revenue.)
Lakewood’s total sales tax revenues for the fiscal year that ended June 30, 2007 are projected at $12 million.
Will the Costco development require city or redevelopment agency assistance?
Neither the city nor the Lakewood Redevelopment Agency is providing any financial assistance to the Macerich Company or Costco for this development. This is a significant concession, reflecting the success of Lakewood Redevelopment Agency assistance in the extension of the eastern wing of the mall in 2000.
The Costco development leverages and expands the value of the public benefits (sales taxes, jobs, and shopper convenience) created by the agency’s strategic investments in the mall.
Does a high volume, warehouse retailer fit in a conventional mall?
According to James Regan, economic development consultant to Lakewood and a principal of Wald Realty Advisors since 1999: “The proposed replacement of fashion merchandiser Robinsons-May with the nation’s leading general merchandise membership store is a strategic and fundamentally sound decision by the Macerich Company.”
What is the mall’s recent development history?
In 2000, a Macy’s with 210,000 square feet of building area opened as the anchor of a new, eastern wing of the mall. The existing Mervyn’s was relocated to allow extension of the new wing to accommodate the Macy’s. (A Bank of America building and a restaurant, which were located in the footprint of the new building, also were removed.)
The new stores provided the opportunity for 60,000 square feet of additional new shops and the new Food Court.
With the acquisition of May Department Stores Company by Federated Department Stores, Federated ended the Robinsons-May brand and relocated the Macy’s store to the former Robinsons-May building in July 2006.
The mall was left with an empty store and very limited options to secure a third department store (given the consolidation of store brands and the limited market for conventional department stores). The Macerich Company acquired the empty building from Federated and secured Costco as a new tenant.
As James Regan of Wald Realty notes, “The Costco addition will accelerate this positive transformation while providing the Lakewood community with an additional highly desired shopping destination. This should ensure the long-term viability of Lakewood Center. Costco adds further diversity to Lakewood Center’s mix of retailers through its unique merchandising that appeals to shoppers of all incomes.”