Costco embraces high-end goods for 'Home' store


		Phil H. Webber / P-I
	Jan Carlson, left, of Costco Home's sales staff, and Kristen Sauer, a vendor for Global Resources in Los Angeles, sort pillows at the store in Kirkland.

But then, Costco's new Kirkland outlet isn't your average big-box retail store. It's even unique for Costco. Of the company's more than 400 warehouses worldwide, the 103,000-square-foot Costco Home is its only location devoted to a single category of merchandise.

"The industry is watching us very closely," said John Ostmeier, general manager of Costco Home. And with 1.5 million cardholders in its home market, Kirkland seemed like the right place for the Issaquah company to introduce new concepts.

Workers finished last-minute preparations yesterday as customers stopped by, trying to get an early peek at the store's merchandise.

Although the company has sold furniture before, Costco only offered it twice a year, usually between seasons. Customer response to those sales eventually drove the company to test Costco Home.

Unlike traditional Costco warehouses, where merchandise is stacked on shelves or wooden pallets, Costco Home displays furniture in a showroom setting. Individual bedrooms, living rooms and dining rooms are set up to feature the store's best -- rugs, lamps, bedspreads and tables -- as they might appear in someone's home.

Everything in the warehouse, including the faux palm trees, is for sale. In all, the warehouse boasts about 3,000 items and an inventory of $7 million. (Costco warehouses typically carry about 3,400 products, including food.)

Thomasville, Ralph Lauren and Waterford Crystal are some of the big-name brands being sold.

As it does in its other warehouses, Costco will offer members lower prices for its furniture, said Doranne Acinpura, assistant vice president and general merchandise manager, non-foods. A Henredon bed that retails for about $14,000 is available for $10,000, she said.

The warehouse stocks inventory on site, so customers -- who are encouraged to grab home accessories right off the showroom display -- can take home purchases the same day. Some products may be custom-ordered for pickup in about four to six weeks.

The introduction of a single-category warehouse may be a good move for the company in light of some analyst concerns that the warehouse market will be saturated in a few years. Although saturation is "not a major issue yet," the company may look for ways to expand its merchandizing, said Dan Geiman, an analyst with McAdams Wright Ragen.

"Eventually to keep growing they've got to find some other avenues," he said.

The company already is working on another warehouse concept: a Costco Fresh grocery store in Bellevue. Costco officials said in September they plan to build the new warehouse, to include a pharmacy, optical department, photo processing and cafe, on a former Kmart site.

The success of Costco's furniture warehouse will have a significant effect on its development of future warehouse concepts, Ostmeier said. Although the company has not officially said it will open more Costco Homes, Ostmeier is already scouting possible West Cost locations.

"I think we're setting the stage for that," he said.

P-I reporter Christine Frey can be reached at 206-448-8142 or christinefrey@seattlepi.com

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