Costco plans store in Lexington's Hamburg area

ssloan@herald-leader.comJuly 12, 2012 

Lexington's shoppers are getting their longtime wish: Costco is on the way.

An application has been filed with the city Planning Commission noting that the beloved members-only warehouse company, the second largest retailer in the country, plans to open a location near Hamburg.

The company has built a fiercely loyal shopper base with its low-price assortment of products, in store and online, that range from staples like food, office supplies and toilet paper to the luxurious like high-end jewelry, pianos and saunas. It also sells services like business payroll processing and such unexpected items as coffins.

"They've got a tremendous reputation," said Tod Marks, senior projects editor for Consumer Reports. The non-profit organization, which publishes the popular magazine and Web site, recently rated Costco as America's top chain store, outpacing such competitors as Wal-Mart, Target, Meijer and Sam's Club in its surveys.

Costco declined to discuss its plans to open a Lexington store, but Patrick Madden, a lawyer whose family has developed much of Hamburg, said the company has "been interested in the market for a heck of a while."

The Costco store is planned for the corner of Man o' War and Polo Club boulevards, across Interstate 75 from the primary Hamburg shopping area.

"I've always had numerous people come to me about the land," Madden said, "but I wanted to try to kick it off with something really special."

In addition to the Costco, which Madden estimated would be about 140,000 square feet, and its gas station, the area will include small retailers and restaurants.

The land next to the Costco is owned by Baptist Healthcare System and has been planned to one day be a hospital. The company had intended to build a new hospital there in years past but decided instead to make the expansion of its Central Baptist Hospital campus on Nicholasville Road its priority.

"Eventually over time, that will all be just like Hamburg on the other side of the interstate," Madden said, noting residential developments are planned for the opposite side of Polo Club Boulevard.

The timing of Costco's development is not certain; this filing is the first in a long process. At this stage, the company and its representatives are asking the city for permission to modify the zoning regulations governing the site, because the law prohibits stores the size of Costco.

"We've got a ways to go," Madden said. "We'd like to have them open before November of next year if that's at all possible."

That would be welcome news to many shoppers in Central Kentucky. Last month, when Ann Townzen of Lexington went to opening day of the Trader Joe's grocery, another store that area shoppers had longed for, she remarked, "I'll be a complete person if we ever get a Costco in Lexington."

On Thursday, when she learned of the retailer's plans, she exclaimed that her day had been made.

"It's just a positive, joyful atmosphere you walk into," she said of Costco. "You're happy being there, and when you leave with that kind of feeling, you're excited to come back the next time."

Townzen was introduced to the chain by her youngest brother, who lives in Los Angeles. Now she makes trips to Louisville, which is the nearest Costco along with two in the Cincinnati area. In fact, she and her husband were driving to Louisville on Thursday for another reason but planned to stop by the store.

For the uninitiated, Costco, like rival Sam's Club, requires an annual membership fee — $55 for individuals — to be able to shop. The store specializes in bulk items, but offers smaller quantities, too.

"A lot of people say, 'My gosh, why pay for the privilege of shopping?' " said Marks, the Consumer Reports editor. "You have to look at it from a lot of different perspectives.

"It's day-in-and-day-out bargains on products people buy all the time."

It's not always the lowest price — groceries often price popular products at or below cost to drive traffic — "but you have a good everyday low price," he said.

The money "you spend for your membership fee can be easily paid for in your first trip to the store if you buy something like a TV," Marks said. "I rarely see anybody get out of that store for under $100.

"Even when times were bad at the height of the recession, warehouse stores were holding their own."

Costco is often faulted for its long checkout lines but is still considered the top of the warehouse-store market for multiple reasons. Its store brand, Kirkland, is highly regarded, and its return policy allows for almost anything to be brought back at any time with some exceptions, such as electronics.

"They have one of the best return policies going," Marks said. "I've brought back fresh fruit because I felt it wasn't sweet enough, and I never have a problem."

For Townzen, the return policy means "I'll try things I wouldn't try otherwise because I know I'm not going to get ripped off and lose my money."

The chain also has set itself apart with its work force. The company's average hourly wage is $20.51, according to the documents filed with the city. A typical Costco, like the one planned for Lexington, employs 242. The company's annual shareholder presentation stated 85 percent of all employees are eligible for benefits.

"The employees there act like they're owners instead of just workers who are there to collect a paycheck," Townzen said. "They're invested in the success of the company."

It's yet another reason Townzen "can't find anything wrong with Costco," she said

Or as Madden put it, "they really are just the top of the top."

Scott Sloan: (859) 231-1447. Twitter: @HeraldLeaderBiz

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