OK, I admit it; I’ve been covering Costco
As it turns out, I can probably be forgiven for forgetting, since there are only two Costco Home stores, located in Kirkland, Washington and Tempe, Arizona; both will close on July 3. This move will not result in any layoffs, nor will it have an impact on Costco’s operations or financial results. It says a lot about our troubled times, though.
Costco’s Jim Sinegal said, “The current economic slowdown and resulting weakness in the home furnishings business in particular have led us to conclude that the single-format Costco Home concept does not fit into our long-term expansion plans.” Shareholders should probably breathe a sigh of relief.
Now that the housing bubble has turned into a bust, it makes sense that the previously insatiable demand for home furnishings has slowed to a crawl. Home Depot
Costco’s move is not the first move like this in the retail landscape, and in my opinion, it certainly won’t be the last. For example, Tiffany
Many retail launches seemed like good ideas at the time, when consumers were euphorically spending based on credit and home prices were moving ever higher. Many of those bubble-era concepts should probably be abandoned; instead of demanding more of everything, consumers are focusing on wanting less. Frivolous concepts that don’t appeal to frugal consumers could be albatrosses.
And of course, the ugly consumer climate puts a lot of weak retailers on death watch, too; the newly fiscally responsible consumer is killing retail. The retail landscape is going to look a whole lot less populated when all is said and done.
I still believe Costco is one of the strongest retailers around, given its core mission to provide reasonably priced goods to consumers on budgets. Sometimes a good run is better than a bad stand, and Costco is smart and pragmatic to ditch a separate home concept.