The plan: Costco proposed building a new facility in Fresno, California on the order of 241,342 square feet, which is about 65% larger than the company’s typical warehouse club.
- The company aims for the facility to combine online and offline retail under one roof, dedicating roughly 47,000 square feet of the space to ecommerce fulfillment.
- In addition to the warehouse, the project would also include 32 fuel pumps, 889 parking stalls, a drive-through car wash, and a cross-docking logistics hub.
Looking ahead: Ecommerce accounts for a relatively small share of Costco’s overall revenues (our forecast expects it to generate $15.93 billion online this year, which is less than 10% of the $160.28 billion it generated in the first three quarters of this fiscal year).
- But the proposal represents Costco’s recognition that improving its ecommerce fulfillment is a critical part of its growth.
- The company’s plan echoes a similar format from Target, which last November announced a new 150,000-square-foot format that has about five times more backroom fulfillment space than its other stores.
The big takeaway: The next wave of big-box stores that will be built throughout the US suburbs and exurbs will likely borrow from Target’s and Costco’s hybrid store models.