Andrew J. Groveman
The Tower at Peabody Place
100 Peabody Place/Suite 1400
Memphis, TN 38103
Melinda Medlin or Kent Landers
Thompson & Company
FOR IMMEDIATE RELEASE
Costco to open
148,000-square-foot warehouse club at new Belz property
in southeast Shelby County;
MEMPHIS, Tennessee (July 12, 1999) Explosive growth in southeast Shelby County has spurred Belz Enterprises to begin construction on a new retail development at the intersection of Hacks Cross and Winchester roads. Named Centennial Crossing, the 43-acre development will offer 300,000 square feet of retail space, and will be anchored by a 148,000-square-foot Costco wholesale membership warehouse club.
Located just east of Nonconnah Parkway, the development gives retailers strategic access to the strong spending power of southeast Memphis residents.
"Although we have developed and managed office and industrial properties in southeast Shelby County for some time, Centennial Crossing marks Belz first retail investment in the growing Nonconnah corridor," said Andrew J. Groveman, senior vice president, Belz Enterprises. "The demographic mix of the area, coupled with its strategic location, is stimulating new investment by national retailers not presently operating in Memphis."
One such retailer is Issaquah, Washington-based Costco wholesale.
"We have been studying the Memphis market for some time, and believe the combination of a strong business base with the growing number of households reflects our target marketing groups," said Joel Benoliel, senior vice president of real estate for Costco. "Until the mid-90s Costco was primarily bi-coastal; we had a strong presence on both the West and East Coast, but little representation in between. Our expansion into the Memphis market is one of our strategic steps to reaching millions of potential members in Mid-America."
Costco opened its first "inland" East Coast stores in Atlanta in 1996. Since then, the company has expanded into Detroit, Chicago and Nashville, and plans to open approximately 25 new locations in fiscal 2000.
Known for its low prices and diverse product line, Costco offers customers everything from computers to crayons at prices so close to cost that the companys 1998 gross margins were less than 11 percent.
"Our business philosophy is to drive prices down and value up," Benoliel said. "By pricing everything at low margins, our members know that any price at Costco is the best value in the market. Unlike many other discount retailers, we do not rely on loss leaders to generate traffic in our warehouses."
Costco keeps prices low by reducing overhead costs, carrying fewer brands but more products, leveraging its buying power and screening customers for memberships.
Through these tools, Costco builds brand loyalty and secures lifetime customers. According to a 1997 study by Bellevue, Washington-based Herbet Research, Costcos membership renewal rate is nearly 97 percent.
Costco one-year memberships range in price from $40 for a basic membership to $100 for an executive membership. While the $40 membership entitles most any consumer access to all of Costcos low prices, the $100 membership offers individuals access to health insurance, auto/home insurance, mortgages, real estate services, check printing, long distance and a variety of other premium services.
One distinction between a warehouse club and a discount retailer is that warehouse clubs screen potential members based on business affiliations. While many consumers are eligible for membership, Costcos target demographics are professionals and small-business owners who buy in large quantities for the business and home.
In fact, many of Costcos products are intended for resale. According to the company, it often is more efficient for small businesses to purchase their goods for resale from Costco than from a distributor.
The Costco at Centennial Crossing will offer hundreds of goods and services in Costcos broad portfolio -- pharmacy, optical, gourmet foods, office supplies and even gasoline.
Costco also is constructing a 148,000-square-foot location at 2431 N. Germantown Parkway near Interstate 40. Both locations are expected to open in mid-November.
Belz Enterprises will complete construction on the remaining 152,000 square feet of space at Centennial Crossing by early spring. The development also includes space for two out parcel businesses.
Costco currently operates 288 warehouses, including 218 in the United States, 58 in Canada, seven in the United Kingdom, three in Korea, one in Taiwan, and a warehouse in Japan; as well as 16 additional warehouses in Mexico with a joint venture partner. The Company also operates Costco Online, an electronic commerce Website at www.costco.com.
Belz Enterprises is a leading innovator in real estate development with interests throughout the South and much of the country. Belz develops, owns and manages over 25 million square feet of industrial/warehouse/distribution centers, shopping centers, office buildings, mixed-use centers and corporate campuses. The company also owns a group of premier hotels including the Peabody Hotels in Memphis and Orlando.