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Wednesday, June 19, 2024

A Costco desert: Gainesville residents pine for Kirkland Signature

Of the 50 most populated cities in Florida, Gainesville is farthest from nearest warehouse

Costco Wholesale’s Perimeter Warehouse is seen on Sunday, Nov. 19, 2023 in Sandy Springs, Ga.
Costco Wholesale’s Perimeter Warehouse is seen on Sunday, Nov. 19, 2023 in Sandy Springs, Ga.

At Butler Plaza, a mix of grocery-store chains — Sam’s Club, Whole Foods, Publix, Trader Joe’s, Walmart and Aldi — compete for Gainesville shoppers’ attention, all within a one-third mile radius. But one store is noticeably missing, not just from the plaza, but from the city entirely.

Costco Wholesale, beloved big-box warehouse chain and world’s largest organic food retailer, has 31 Florida locations. But Gainesville residents must drive two hours north to Jacksonville or two hours south to Orlando if they want to stock up on industrial-sized bags of coffee beans, browse free samples or feast on $1.50 hot dogs from the food court. 

Costco’s absence isn’t for lack of effort on the city’s part. Butler Enterprises approached the retail chain about opening a Gainesville location in 2016, when it opened an expansion north of Archer Road into Clark Butler Blvd. the offer was rejected.

Costco advised Butler that Gainesville was not the store’s market, Butler Enterprises wrote in an email to The Alligator. 

Having a Costco would encourage the Gainesville community to eat healthy for less money, Mary Monahan, a 61-year-old retiree said — especially if a location opened near downtown Gainesville, where there are fewer healthy grocery options.

Monahan has lived in Gainesville since 2008. She and her husband have had a membership for over 30 years, despite being two hours from the nearest warehouse in all four cardinal directions, she said.

“My husband has an ongoing joke that apparently the people deciding expansions at Costco went to FSU,” she said.

Monahan stops by a warehouse whenever she visits friends in other Florida cities, she said. Although she only makes the trip about five times per year, the membership is still worth her money, she said. 

Costco’s Kirkland Signature brand carries products she can’t find proxies for elsewhere — like her husband’s preferred coffee or her favorite dried fruit mixes, she said. Though she caved and joined Sam’s Club two years ago, she would cancel her membership immediately if Costco came to Gainesville, she said.

“At Costco, you can get dried apricots, dried cherries, dried blueberries,” she said. “At Sam’s, you can get Craisins and Craisins. It's just very much more processed foods and packaged foods.” 

With membership fees at $60 per year compared to Walmart-owned competitor Sam’s Club’s $45, Costco has a reputation for attracting higher-income customers. The typical Costco customer visits the store every other week to spend about $100 per visit, according to a February report from Business Insider.

Costco stores’ target customers are evident in the chain’s chosen locations. Median household income among the 31 cities in Florida with Costcos is $69,592. That’s almost $8,000 more than the statewide median — and over $20,000 higher than the Gainesville median.

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Gainesville’s poverty rate of 28.5% also lies above Florida Costco-positive cities’ average of 12.3%.

“I think that the economics of Gainesville does present a bit of a challenge for Costco,” said Joel Davis, UF Warrington College of Business clinical professor and David F. Miller Retail Center executive director.

When a store looks to open a location in a new city, it must consider both profit and costs, Davis said. For Costco, the profit side can be split into two components. 

On the business-retail side of profit, Costco sells to restaurants and businesses that then resell its products. About 11.8 million businesses held Costco memberships in 2023, according to Business Insider.

From a consumer-retail standpoint, Costco focuses on how to sell to its other customer base — individuals and families. It uses member data from home addresses to shopping receipts to figure out what type of customers will spend the most money at its stores, Davis said.

On the cost side, businesses have to get the right piece of property in the right place at the right price, he said.

Finding the right location, with favorable terms that will allow it to remain profitable, could be the snag keeping Costco from opening in Gainesville — rather than concerns about customer demographics, he said.

“I would be very surprised if Costco was not interested in moving to Gainesville,” he said. “Gainesville is not a major metropolis and it’s not a major city, and so it doesn’t automatically qualify in the top destination, but I do think the economics here would support one.”

At just over 50 miles from the nearest warehouse, Gainesville is farther from Costco than any other city among Florida’s top 50 most-populated cities. Among the top 100, Gainesville is second only to Pensacola, whose nearest store is in Mobile. 

Though Gainesville’s 75,000-student university population doesn’t appear the ideal candidate for bulk grocery shopping — a habit more typically associated with large families — students with Sam’s Club subscriptions hint at youth interest in warehouse shopping.

Tanya Ramos, a 19-year-old UF psychology sophomore from the Orlando area, grew up going to both Sam’s Club and Costco with her parents. When she moved to Gainesville, her parents bought her a Sam’s Club membership for access to bulk groceries at low prices, she said.

As a social committee chair for her honors fraternity Phi Sigma Pi, Ramos visits Sam’s Club about once a week to stock up on snacks for group events in addition to her personal shopping, she said.

If a Costco were to open, she would purchase a membership but wouldn’t cancel her account with Sam’s Club, she said.

“I would love to have both of the options,” she said. “I would like if they would make a Costco a little bit closer … I don’t want to take an Uber to groceries, because I’m just wasting more money than I should.”

Costco has not announced any plans to open in Gainesville. Its next Florida location will likely be a recently approved project opening in Stuart, which began land clearance in June.

Contact Zoey Thomas at Follow her on Twitter @zoeythomas39.

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Zoey Thomas

Zoey Thomas is a second-year media production major and the university administration reporter for The Alligator. She previously wrote for the metro desk. Other than reporter, Zoey's titles include espresso connoisseur, long-distance runner and Wes Anderson appreciator. 

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