Who will prosper — Costco or Sam’s Club — and what will happen to other Billings retailers when these two wholesale giants compete directly next month?
Wal-Mart won’t share financial numbers, so comparisons are difficult, and the outcomes differ from city to city where the two do battle.
Montana’s only Sam’s Club opened in Great Falls in 1992, and its nearest Costco competitor is in Helena. When the Billings Sam’s Club opens next month, it will be the only city in Montana where the two stores exist.
Tom Dale is mayor of Nampa, Idaho, which is 16 miles west of Boise and part of a metro area that includes half a million people. He said Costco opened a store in his city in August 2006 and Sam’s Club opened two months later.
“There was a lot of speculation about how they would compete because Costco is so well-known in the valley, but Sam’s Club has been a very good competitor,” he said.
In Madison, Wis., Sam’s Club was the pioneer retailer, opening its first store in the 1980s, and Costco is the newcomer.
Madison, with a metro population of 473,000, saw one of its two Cub Foods groceries close recently, but another grocery moved in.
“Another chain out of Iowa, Hy-Vee, just opened up a store in the northeast side of the community, and one has been approved on the southwest side within a mile of the Sam’s Club,” according to Brad Murphy, planning division director for the city of Madison.
In the Denver metro area, competing discount stores can be found within a quarter mile of each other.
Chris Gibbons, director of business/industry affairs in Littleton, Colo., said Sam’s Club tends to draw a lower-income customer than Costco, but both stores seem to do well in his city.
“If you are rational, you’d say we have one already and we don’t need another, but that’s not how free enterprise works,” he said.
Sales taxes pay for up to 60 percent of city services in Colorado, so suburbs and cities compete fiercely for the big box stores. Littleton collects 3 percent of Colorado’s total sales tax, which tops 7 percent.
“They can pay $1.25 million to $1.5 million a year in sales tax, and there’s nobody else who even comes close to them,” Gibbons said. “That’s the way we finance local government in Colorado, so the big boxes are big deals.”