Costco Gets Out of Home and Back to Business

Costco has decided that there's no place for home, at least not as regards its store strategy.

The company has decided to close the two Costco Home stores it has been running in Kirkland, Wash., and Tempe, Ariz., as a test of furniture-oriented specialty retail operations. Costco CEO Jim Sinegal, insisted that the company had learned a lot from its experience with the home specialty operation, and it has an opportunity to apply its hard earned knowledge as the company "will continue to offer home furnishings at all other warehouse locations." Any retailer selling furniture right now has its work cut for it. Besides the tough economy, the aging baby boom population isn't likely to make as many big furniture purchases as once was the case, and its kids have grown up with a wide range of choice and eclectic tastes. Competing with retailers as varied in product and proposition as megastore operator Ikea and Internet-based kanibalhome.com, Costco Home was bound to have problems providing a wide enough range of items to satisfy enough tastes to drive enough volume to provide a return sufficient to keep the store viable. At its warehouse clubs, Costco can introduce a select furniture assortment every few weeks, command good deals on products that hit the trends its members care about, then sell everything through before enthusiasm for any particular style wanes. A corollary to the the company's home closures is its March 20 debuted of the sixth Costco Business Center in Hawthorne, Calif. Warehouse clubs that concentrate more intently on for the needs of small enterprises, Costco Business Centers include services such as print and copy centers and next-day product deliveries to most businesses within their home markets.

In another temporal alignment, the Costco Business Center opening came just as Sam's Club announced a new initiative to serve the small business community. Sam's is loaning out employees as advisors who are assigned to help its small business members find new ways to save money. While one event may not be directly linked to another, the fact Costco would rather invest in a business format than a home format provides a clear indication that new consumer ventures -- and the company experimented with a food-focused concept for awhile before dropping that idea -- won't take a priority over its attending the critical small business customer that warehouse clubs were developed to serve when first conceived.