Costco opening next Wednesday in Middleton

Amy Mertz  —  8/14/2008 8:49 am

It's a good thing for Jym Britton that Costco Wholesale is opening next week in Middleton, with gas prices as high as they are.

Britton, who lives in Madison, has been driving to the Costco in Lake in the Hills, Ill., because it's one of the nearest locations for the wholesaler.

Why would someone drive an hour and 40 or so minutes to shop at a big-box-type store? Lots of reasons, he said. He used to live in Denver, which is where he discovered the fourth-largest retailer in the nation (behind Wal-Mart, Home Depot and Kroger). He likes the store's emphasis on good customer service, as well as its prices, product quality and community impact.

He buys a variety of items in a given visit: groceries, seafood, necessities like paper towels, clothing, tools, even laminated flooring. He and his family have become self-proclaimed "Kirkland Signature fanatics," the Costco house brand named after a town near the company's headquarters in Washington state.

The Middleton Costco, which opens at 8 a.m. Wednesday, Aug. 20, is the second in the state since a store opened last year in Grafton, north of Milwaukee. Costco will compete directly with Wal-Mart offshoot Sam's Club, also a membership-based warehouse. Sam's west Madison location on Watts Road is less than 10 minutes away from Middleton's Costco.

The $10.2 million, 150,000-square-foot store is located in the Discovery Springs development alongside the new Gilda's Club facility and the UW Medical Foundation. Within its walls customers can find a bakery, a grocery, an optical department, a pharmacy, appliances, electronics, furniture, clothing, hardware and many other kinds of products.

Costco operates 538 warehouses, 393 of them in the U.S. The company had sales of $68.5 billion in the fiscal year beginning with May 2007 and turns a profit despite the ailing economy. Sales in recent months were up about 12 percent over the prior fiscal year, according to financial statements on the company's Web site. Costco gets national attention for compensating its workers well -- the average hourly wage is $17 -- and offering impressive benefits to even its part-timers.

Britton said he knew nothing about Costco's honorable employment policies until about two years ago, after he had begun driving to Lake in the Hills, he said. "I realized I was an uninformed Costco member, and I guess one of the reasons we kept driving so far was that knowledge that we were part of something that is so positive.

"I assume it has its flaws. I am not convinced that it is some kind of employment utopia and that nothing ever goes wrong, or that it doesn't have its share of problems. But I have to admit that I've never heard anything to the contrary."

Sue Nelson of Janesville just joined Costco at the Grafton store. She believes it's a big step up from Wal-Mart, although she quickly points out the big-box nature of Costco does not sit well with her either.

But "it has a much better business model than the other big boxes, like Wal-Mart," she said. "It isn't perfect, but I am comfortable supporting that model."

She joined Costco for one sole purpose: to buy seafood.

"In our area, I don't have another source of high-quality frozen seafood -- Alaskan seafood," Nelson said. "If it's out there, I haven't found it.

"While I know Madison has some good seafood places, I can't go running up to Mad City for seafood a couple times a week. We are not looking for cheapest, though the price (at Costco) is OK. We are looking for quality seafood and don't buy much else there."

Nelson generally shops at Woodman's in Janesville, as well as a hometown and Madison co-op, she said.

"While our local co-op memberships are the most important to our buying, there are certain things that Costco is great for. Other than the co-ops, I can't think of another business that I would support so emphatically -- certainly not Sam's or Wal-Mart," she said.

Friends and foes

What effect Costco's arrival will have on competitors -- in Madison, that would be Sam's Club, Wal-Mart, Target, nearby grocers and maybe ShopKo -- is hard to judge. Target's communications department declined comment for this story ("We don't speculate on competitors," a spokesman said), and Sam's Club did not authorize its store manager to comment.

The store could very well improve the retail climate for its neighbors across U.S. 14 in Greenway Station. "Our hope is that Costco will serve as a magnet for area shoppers who will also find their way to downtown Middleton, Greenway Station and Middleton's other business districts," said Mike Davis, Middleton's city administrator.

Davis said the city and the Chamber of Commerce field daily inquiries on Costco, so he senses local residents are eager for the store's opening.

"We consider Costco a valuable employer, with decent-paying jobs with benefits on par with or better than many area manufacturers," Davis said. 

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IF YOU GO

What: Costco Wholesale

Where: On the north side of U.S. 14 and Deming Way, Middleton

Phone: 824-3951

Grand opening: 8 a.m. Wednesday, Aug. 20

Membership cost: $50 annually for business or gold star (individual) status; $100 for executive status, which includes a rebate on most Costco purchases and extra member services benefits. You do not need a membership to use the store's pharmacy. The store does not offer day passes like Sam's Club often does.

Guarantee: Membership fees are refunded if the customer is ever dissatisfied.

How to pay: Surprise -- this store only takes American Express. No, that is not a typo. You can also use a Visa, MasterCard or Discover debit card, but not credit cards from these companies unless they are linked to a bank account.

What to expect: Costco prides itself on offering a "treasure hunt atmosphere" and being nimble with changing its merchandise offerings, according to a slide show on its Web site (www.costco.com). The store might have certain products in for a week or two, then they're gone, replaced by something totally different.

The store feels very large and cold, in the sense that there are no fancy displays or bells and whistles. Products sit in giant stacks; high-definition TVs, along with the ever-popular Wii and Wii Fit, are the first things you see upon entering.

The Web site: More products are available online at www.costco.com than are in the store. On the Web, you can buy furniture, most of which is not carried in stores, and unexpected things such as musical instruments, small watercraft and even caskets. You need a membership to shop online, too.

Thinking green: The store has a Trade-in and Recycle Program that allows you to turn in your old electronic equipment and get a discount on your replacement product. There is an online Value Estimator tool that calculates your potential trade-in value at www.greensight.com/costcotrades.

Also, Costco has bagged the bag, so to speak. For environmental and cost-saving reasons, boxes that once held canned goods or other items stocked in the store often become packaging for carrying your purchases out. Meat and seafood do get bagged to prevent contamination.

Some of the brands you'll find: Sony, Vizio, Borghese, MAC, Waterford, The North Face, Lucky Brand Jeans, Canon, Michelin, Coach, Burberry, Kirkland Signature (store brand)

Local products: Capital Brewery beer, Roth Kase cheese, Brunswick Billiards, Pacific Cycle bikes

The "road show": Expect to see some changing, short-term exhibits of a given company's products. Justin Ferguson, warehouse manager for the Middleton store, said businesses usually have a 10-day period to showcase their goods.

Cafe: The store has a small eatery, where you can buy hot dogs, salads, wraps and more.

Costco or Sam's? Consumer Reports did a comparison of the two warehouse chains in 2007. Readers gave Costco the higher score for groceries, electronics and small appliances, and optical. However, Sam's Club fared better in its return policy. For the report, visit www.consumerreports.org.

One last thing: Several people interviewed for this story who have shopped at Costco suggest self-control is important. It's easy to overspend because certain products might not be there next time you shop, and because prices might be attractive. Sticking to a list is probably a good idea.

-- Amy Mertz 

Amy Mertz  —  8/14/2008 8:49 am