Costco drops Manchester Club plan; Price eyes 1st U.K. unit - Costco Wholesale Corp., Price Co., United Kingdom

Discount Store News, August 2, 1993 by Arthur Markowitz

LONDON -- Costco Wholesale has dropped plans for a club near Manchester, one of three the company projected for the United Kingdom, while The Price Co. has applied to open a Club Price in Liverpool as its initial U.K. store.

The two moves came as the British government seemed to hit the wholesale club concept by ruling that these merchants are retailers, able to open stores only in retail-zoned locations. The companies planning clubs in the United Kingdom had hoped that the government would establish a new category for their stores that would allow them to open in either retailor wholesale-zoned sites.

English supermarket chains had lobbied for the government's final ruling in the expectation that the higher land costs of retailing sites would slow down, if not stop, American companies from launching U.K. clubs.

Costco's plan to open a club in Trafford Park near Manchester had been set back because of a zoning review by the national government's Department of the Environment. Costco cited problems it faced opening in Trafford Park as the reason for its decision, according to Retail Week, a British newspaper.

However, the proposed merger between Costco and The Price Co. may have played a key role in Costco's abandoning the Trafford Park site. Prior to the announcement of the merger, The Price Co. planned to open Price Clubs in England in a joint venture with the Littlewood Organization, a major British retailer believed to have extensive land holdings. A Club Price, the name for the clubs in the United Kingdom, was reportedly planned for Manchester.

Costco seems to have dropped its Manchester site in favor of the projected Club Price as part of its effort to advance the merger. The merged Price/Costco would also benefit from The Price Co's earlier deal with Littlewood as the English company's holdings are retailing sites. Opening clubs in Littlewood-owned locations would negate any expectation that higher land costs would slow down Price/Costco.

While plans for a Manchester club haven't been acknowledged, The Price Co./Littlewood venture has applied to the Merseyside Development Corp. to open a Club Price in that depressed water-front section of Liverpool. The MDC was set up to develop Merseyside and is now doing a planning review of the application, guided by the national government's ruling that clubs are only allowed in retail-zoned locations.

(Manchester was not the only proposed club Costco dropped because of the pending merger with The Price Co. Costco has planned to open a club across from Price Club Canada's office in Laval, Quebec. The Price Co.'s subsidiary, Price Club Canada, is the actual partner with Littlewood in the venture to open clubs in England.)

(Costco is also going ahead with a club in Ajax, Ontario--its first move into Eastern Canada, which had been the exclusive province of Price Club Canada.)

Nurdin & Peacock, the U.K. cash and carry operation that plans to launch its own Cargo Club membership warehouse chain, has picked retail-zoned sites for its initial stores in Wednesbury, a Birmingham suburb, and Croydon, a London suburb.

Costco, meanwhile, was pushing ahead with plans to open a 100,00-sq.-ft. club in the Thurrock Retail Park in the Thurrock suburb of London, where its application has been approved by both the DoE and the local Thurrock Borough Council. The club is scheduled to open in November, prior to the Christmas sales season.

The Costco planned for the Bushey suburb of London has received DoE approval, but the local Hertsmere Borough Council was studying the traffic impact of the club.