New Kalispell Costco store opens Friday

Kalispell shoppers will get an expanded retail store on Friday when a new Costco

store opens in north Kalispell.

In June 2004, the deal was on. In January 2005, the deal was off. In April the deal was on again and construction started.

And so, on Friday, Costco Wholesale Corporation will open its newest 136,000 square-foot store - this one on U.S. 93 North next to Lowe's at the Spring Prairie Center.

The logjam in the initial groundbreaking had been a bill in the Montana Legislature which would have levied a special tax on "box stores."

Though Costco - the fifth-largest retailer in the nation - most likely would have been exempt from the tax because of the high salaries it pays its entry-level employees, company management was nonetheless against the bill.

"We felt the tax was a selective tax and for that reason we thought it was unfair," said Doug Schutt, chief operating officer for Costco's Northern Division. "We thought that singling out a single industry was wrong."

The bill died when it did not meet an April 4 transmittal deadline for revenue bills.

Construction on Kalispell's new Costco began soon after.

At almost twice the size of its predecessor on U.S. 2. East, the new Costco will have 190 employees - 60 more than the old store.

"We'll be adding new departments such as pharmacy, optical, hearing aids, one-hour photo and a gas station," said John Bartlett, general manager of the Kalispell Costco. "We'll also have a service deli with rotisserie chicken and a food court."

For the hungry shopper, the new Costco will sell hot dogs, pizza and homemade churros - a kind of fried Mexican pastry on the order of a doughnut-pretzel.

And then there are the free food samplings for which the chain is famous. Bartlett said there are usually between 10 and 15 foods available for tasting on any given day.

Bartlett, who has been with Costco since 1988, began his career there as a cart-puller - the person who collects the carts from the parking lot and returns them to the store. It's an all-weather, entry-level position.

According to Schutt, beginning salaries for employees today are about $10 an hour. The average Costco worker throughout the chain's 339 U.S. locations earns about $16 an hour. More than 50 percent of employees are full-time and turnover, historically, is low.

Jim Sinegal, Costco's president and chief executive officer, said in a 2004 interview with BusinessWeek Online, "We found that by compensating employees generously to motivate and retain good workers, one-fifth of whom are unionized, Costco gets lower turnover and higher productivity."

To keep prices under control, Costco never marks up merchandise more than 15 percent. It also economizes by eliminating advertising and public relations functions.

"We do not advertise," Schutt said. "We think it adds cost. The best kind of advertising you could ever have is word of mouth. Same goes for public relations. We feel it's an unnecessary cost."

The new store will not only add departments, it also will expand the size of current ones. The food section will offer gourmet meats and cheeses and there will be a fair-sized furniture area, although Schutt said that Costco generally sells furniture only in January, February, July and August because the items take up too much floor space.

Kalispell will get 12 new gas pumps when the U.S. 93 store opens. All three grades of fuel will be sold there, Bartlett said.

"We buy from refineries and we strive to maintain the lowest gas prices within the market. Prices might be adjusted several times throughout the day, depending on what happens in the market."

The old Costco - 72,000 square feet - was built in 1993. At that time, Kalispell was one of four test markets for the chain, Schutt said.

"We tried to build a smaller box. We weren't quite sure in some of those markets whether the population could support a full-size Costco. We certainly found that markets like Kalispell could.

"We felt that the market had grown here and that our sales were strong. We thought we could do a lot more business with a larger building."

Currently the old store serves 1,400 to 1,800 members a day.

"We expect about 50 percent more after we open the new store," Bartlett said.

The move from U.S. 2 to U.S. 93 has been, for the most part, an invisible one. The new store has been stocked with new merchandise from the ground up. Nothing has been toted over from the old store.

"Some of the old stuff may get sent to other buildings in Montana," Schutt said.

He said the reason merchandise isn't moved from the old location to the new one "is we want that existing facility to be fully operational until the day we open" the new one.

"We owe it to our members. They shouldn't be penalized because we're opening a new facility. It would be very easy to run it down to nothing and we feel that's wrong."

Kalispell technology firm Semitool Inc. may buy the old Costco building on U.S. 2. The building and land had been advertised for $5 million.

"We have been in discussions with them," said Richard Hegger, Semitool general counsel. "We have looked at that property for the purpose of expanding our manufacturing capabilities. But we have not finalized any transaction with Costco."

On opening day at the new store, gates will go up at 8 a.m. in a one-time-only deviation from the standard Costco 10 a.m.

New store phone number: 758-2501.

Reporter George Kingson can be reached at 758-4438 or by e-mail at gkingson@dailyinterlake.com