Is Costco really a threat to Manhattan?

Or is Manhattan more of a threat to Costco?

For years the discount warehouse retailer Costco has been looking for a site in Manhattan. According to the New York Sun, they may have found one. But there is vocal opposition from residents, politicians and even some unions.

Much of the rationale behind opposing it seems to be that a Costco-type store won’t work: That Manhattan doesn’t offer the types of shoppers or the automotive access that Costco requires. This may be true, but shouldn’t that be Costco’s problem? Presumably, they’ve done their research and think there is a way to survive.

Let’s look at a few of the other reasons why some New Yorkers are opposed to Costco:

1. That it may challenge local family-owned businesses supported by the walkable nature of most neighbourhoods. I have a hard time believing that the opening of one Costco will transform the way New Yorkers live and shop.  This argument doesn’t work for me:

  • People choose Manhattan because of the densely packed variety of amenities that you can walk to.
  •  If you live in such a neighbourhood, getting in a car to go to Costco is inconvenient. You’ll only go (if you are a Costco shopper) every month or two to stock up on a few bulky things like toilet paper, paper towels or diapers.
  • Most people in Manhattan live in small apartments.  A lack of much home storage space means that buying in bulk is not practical. It’s easier to shop daily or every few days and leave the storage of most food and other products to your local small supermarket rather than finding space in your own 900 s.f. apartment that you share with 3 other people.
  • Perhaps Costco’s target market is businesses stocking free snacks for kitchens in the office towers rather than people buying personal items?

2. Costco will generate more traffic and make the area even more congested and slow. Again, this may be true but Costco must believe that its shoppers will come at off-peak times or would be driving by anyway.  If it’s that hard to shop there, no one will do it.

As some North American cities welcome more people and higher densities into certain areas, more “big box” retailers like Costco will attempt to enter these captive markets.  Some will face considerable opposition; others will be welcomed or enter more quietly.  I predict, all will need to adapt their styles and even philosophies in order to thrive.

5 comments

  1. Chris says:

    1. Can you provide any evidence where “big box” stores who have moved into neighborhoods – captive or not – have changed their styles, let alone philosophies in order to survive, and not the exact opposite being true? Its my feeling that huge chains have enough capital to push into a community and offset any disadvantages by force of numbers, eventually pecking away at neighboring shops. I don’t have evidence either, but I also didn’t write the article.

  2. Wendy Waters says:

    Great question Chris. What’s interesting is that these big box stores haven’t made many inroads into existing densely populated places where people shop on foot more than they shop by car. That’s why I say somewhat flippantly that Manhattan may be a threat to Costco — it won’t work in many neighborhoods there, unless it is somehow on a major driving thoroughfare.

    In Downtown Vancouver, a few “medium” boxes (eg: Future Shop — owned by Best Buy; and Winners owned by TJ Maxx) have entered an area of downtown slightly ahead of a number of adjacent new condominium residences. These stores likely pull most shopping dollars away from other chains at the nearby Pacific Centre Mall and not small independent businesses. They do offer slightly different products from their suburban counterparts.

    There’s also a Costco below a new condo development just outside of downtown Vancouver, but it’s on a driving thoroughfare and again beside a newer residential node, which is similar to the suburban model of where big boxes come from.

    Although not a “big box”, McDonalds failed in a walkable, dense Vancouver neighborhood because it couldn’t compete with the well-established local, (often immigrant-)family owned businesses that offered far better food, just as cheap.

    I’ll keep looking for examples. Maybe another reader has some?

    Addendum: http://www.thestar.com/comment/columnists/article/462641 – here’s an article about some big boxes (Ikea, Canadian Tire, Home Depot) in more urban areas of Toronto. Because I don’t know Toronto that well, I don’t know is whether these areas have high population bases already, or are seeing new condo towers introducing people to the area. I suspect the latter, but maybe someone can enlighten me.

  3. Andrew says:

    Cambie St in Vancouver between the bridge and Broadway is getting a number of “big box” stores in mixed-use urban formats. There is a combined Best Buy and Canadian Tire in one building and a Save-on-Foods, Home Depot and condos in another. While not exactly as fine-grained as other neighbourhood shopping streets in Vancouver. They do a fairly good job of fitting into the neighbourhood and being walkable. Particularly Canadian Tire and Home Depot as they are normally car oriented stores.

  4. Chris says:

    Thanks, and don’t sweat digging too much. I have been in Asia for a few years and have kind of lost track in my memory of weather there were more Mom&Pop style Walmarts, as ironic example, in denser N.American neighbourhoods. (Though I do remember a very quaint Burger King Boutique Style restaurant just outside the old walls of Quebec City.) Also, I am from Edmonton, a place so planned for driving an parking, that rarely must chains and big box stores compete with the relatively few walkable neighbourhood retailers.

    I guess a further question I have from this is, as Andrew mentions Cambie, how do these big box stores conform to the economic realities of the neighbourhood? I mean, its fine to be walkable, to have less offensive signage, to not be so crass in appearance but what about the meat: prices and wages? Mom&Pop doesnt get squeezed out of places because people prefer driving and parking at Home Depot, but because they can charge less and pay people less. I’m sure these policies will never change regardless of the level of urbanity in it’s host community.

    I remember reading that the only non-centrally regulated McDonald’s policy was wages: Wherever you are, pay as little as you can.

  5. Wendy Waters says:

    Andrew and Chris,

    My take on the Cambie developments is that the Canadian Tire, Best Buy, Home Depot lite, etc. are going into an area simultaneous with more residential housing and “densification”. They are there first, residential is following.

    They took over space that was previously a Canadian Tire, car dealerships, auto repair shops, etc.

    There wasn’t the population base to support a small hardware store, for example. What’s along Broadway near there tends to serve the hospital and medical buildings, as much as a residential population.

    Now with more people moving to that area, these big stores will do well. But Cambie street doesn’t have too many smaller store fronts for independent retailers.

jordan 12 cherry jordan 12 cherry jordan 12 cherry jordan 12 flu game jordan 12 flu game jordan 12 flu game jordan 12 french jordan 12 french jordan 12 french jordan 12 gym jordan 12 gym jordan 12 gym jordan 12 ovo jordan 12 ovo jordan 12 ovo jordan 12 unc jordan 12 unc jordan 12 unc jordan 12 wings jordan 12 wings jordan 12 wings