With Little Rock outlet, Costco plans entry into Arkansas

In this Wednesday, May 9, 2012, file photo, David Lee shops at a Costco Wholesale store, in Portland, Ore. (AP Photo/Rick Bowmer, File)
In this Wednesday, May 9, 2012, file photo, David Lee shops at a Costco Wholesale store, in Portland, Ore. (AP Photo/Rick Bowmer, File)

Costco Wholesale, the members-only warehouse retailer that competes with Walmart's Sam's Club stores, is coming to Arkansas, one of the few states where it has no outlet.

The development is planned for a nearly 32-acre tract at Chenal Parkway and Kirk Road in west Little Rock, just across from a Kroger Marketplace grocery store.

The warehouse and ancillary venues would total 165,093 square feet, according to documents filed with the Little Rock Planning Department. The proposal for a planned commercial district is scheduled to go before the city Planning Commission on May 14.

Plans include an attached liquor store, an area set aside for optical examinations, a tire center, and a free-standing gas station.

The documents filed with the Planning Commission say the Costco Wholesale store will employ between 200 and 250 people, with both full-time and part-time positions.

Costco's building and parking -- a total of 743 spaces -- would take up about 21 acres, with the balance available for developing six lots for separate businesses.

Costco executives have looked at the Little Rock market for more than three years. Other properties they considered included the northwest corner of Interstate 430 and Cantrell Road. They also looked at the southeast corner of Kanis and Bowman roads.

"Their due diligence takes time," said Jay Chesshir, president and chief executive officer of the Little Rock Regional Chamber of Commerce. "It's a significant investment for them."

How big of an investment, he couldn't say. Others have put the price tag for a Costco at about $100 million.

It also seemed only a matter of time before Costco would enter the Arkansas market. Until last month, Arkansas was one of only two states in the region to not have a Costco store. The first Costco in Mississippi opened in Jackson in March.

"This is about the largest market they're not in," said David Elrod, a longtime Little Rock commercial real estate broker. "It makes sense."

Oklahoma has two Costco stores, including one in Tulsa. Louisiana has three. Tennessee has five, including two in the Memphis area. Missouri has six. Texas has a total of 33.

Costco had a total of 785 locations as of its fiscal 2019, including 546 in the United States.

It had net sales of $149 billion for the fiscal year, according to its 2019 annual report. It boasts 99 million cardholders and 254,000 employees.

Sam's Club is the nation's other top members-only retailer. Unlike Costco, which is a stand-alone retailer, Sam's Club is a division of Walmart Inc. It also boasts nearly 600 locations in the United States, including one at 900 S. Bowman Road, about 3 miles from the proposed Costco site.

Sam's Club posted revenue of $59 billion for the fiscal year that ended Jan. 31, 2018. Like Walmart, its headquarters is in Bentonville.

An annual membership at Costco is $60. Sam's Club annual memberships are $45.

Mayor Frank Scott Jr. said on social media Monday that he was pleased Costco was planning a Little Rock location.

"We're appreciative that a national wholesale warehouse such as Costco has chosen Little Rock as a place they want to do business," Scott said.

He added that the space at the southwest corner of Chenal Parkway and Kirk Road "has great visibility and access."

The application will go before the Little Rock Planning Commission at its scheduled meeting on May 14, the mayor said. It will then go before the Little Rock Board of Directors for final approval.

The city Board of Directors approved a resolution earlier this month that allows the Planning Commission to meet virtually during the coronavirus pandemic, though it has not yet done so. The commission does not have a monthly meeting requirement.

Ward 5 City Director Lance Hines, who represents the Chenal Parkway area on the Little Rock Board of Directors, said he was supportive of the development.

"The folks in other parts of the country that use Costco like them," he said. "I think it'll be a welcome addition to the scenery out here."

Hines said he got a heads-up about the project a few weeks ago, when developer Hank Kelley distributed information to the surrounding neighborhoods. Those include the Villages at Wellington, St. Charles and other neighborhoods in the Chenal area, Hines said.

"All the calls I've gotten have been positive," he said of the feedback from residents.

Hines said the site likely appealed to developers in part because it's already been cleared and leveled, so there isn't much preparation to do before construction begins, which he said could happen in July.

Other sites the corporation considered for a Little Rock location in the past few years did not have sufficient infrastructure to support a facility of that size, Hines said.

"I think that's why they ended up going a little further out west," he said.

The proposed site is about 3 miles away from Trader Joe's, another highly anticipated grocery option in Little Rock that opened Oct. 22. Hines said he wasn't worried about oversaturation in the market, since Costco serves a different demographic, according to information he'd gotten from the company.

The Costco development plans come weeks after the disclosure that Amazon, the giant multinational technology company and retailer, was building a distribution center on an 83-acre site at the Port of Little Rock.

"It's validation of what's happening in this economy, what others see outside of our area happening in our economy. And national retailers want to be wanting to be a part of that, not only for their growth, but in turn fueling our growth," Chesshir said.

The development also provides an economic punch against the covid-19 pandemic, which has slowed economic activity.

"It's interesting when you look at construction activity, when you look at investment activity, our pipeline is still very full and working. We've not yet had a project that is in the decision-making process or actually moving forward to construction who have done anything other than to continue to push forward full-steam ahead," Chesshir said.

A Section on 04/28/2020

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