Fahey: Could Costco be on the way?

Beaufort County is in one of the nation's fastest-growing areas.

Estimates earlier this year found a one-year population increase of about 4,700 people -- a growth of 2.4 percent -- in the combined Hilton Head Island, Bluffton and Beaufort area between 2013 and 2014. That earned the area the No. 13 spot in U.S. population growth, according to 2015 U.S. Census Bureau data.

With booming population comes development -- including retail growth. That means more places to shop and dine, on top of an already strong array of locally owned and chain options. So I asked readers: If you could add something new to our retail landscape, what would it be?

More than 500 readers responded, and overwhelmingly, the top-requested store was warehouse retailer Costco. The rest of the top 10 featured a mix of grocery stores, department stores and restaurants.

Retailers rarely comment on new locations until late in the process and won't reveal what market-research methods they use to pick store locations. But an analysis of common factors such as population, demographics, local competitors and traffic counts and a peek at their past histories can provide clues as to whether a retailer might come to Beaufort County and which locations might be a potential match.

And when it comes to readers' top pick of Costco, the odds of a landing a Beaufort County store appear good.

HEART OF THE LOWCOUNTRY

With its proximity to Hilton Head beaches, reasonably priced real estate and good public schools, Bluffton is poised for a growth spurt -- a factor that could lure a Costco to its borders.

Current data suggests the town's population could swell to more than 22,000 residents by 2020, although trends are always changing, according to Bluffton's Director of Growth Management Shawn Leininger. The population is on track to be more than 31,000 by 2030. The current population is 15,199, according to U.S. Census data.

If Costco were to come to town, the warehouse retailer would likely be attracted to two planned developments along U.S. 278:

• Bluffton Gateway, an oft-discussed shopping center, planned for the intersection of U.S. 278 and S.C. 46. Sam's Club has been rumored to be the anchor for the new development, but Walmart representatives will not confirm it. In March, however, the company did say it was looking at Bluffton as a site for a new location.

The new development will sit at a well-traveled intersection -- a big draw for major retailers. About 43,300 vehicles per day travel U.S. 278, in the section in front of the Bluffton Gateway site, according to data from the S.C. Department of Transporation. About 9,900 vehicles travel S.C. 46 daily and the nearby Bluffton Parkway has about 10,600. That's a total of 63,800 vehicles per day around that intersection.

"We're hoping to break ground in 2016," he said. "The timing is good for the tenants."

Presley would not say which retailers might come to Okatie Crossing but said several tenants were confirmed and others were in discussion.

The 280-acre development was originally proposed as a high-end fashion center featuring retailers such as Ferragamo and Gucci. The development was later modified to feature more budget-conscious, big-box retailers such as Target, Kohl's and a wholesale retailer.

Horne Properties resumed efforts in 2010 to develop the parcel after commercial real-estate developer The Sembler Co., which had planned the 1.6 million square feet of space, let a purchase option with Horne lapse.

A 2009 concept site plan for Okatie Crossing shows a warehouse club, a home-improvement center and a grocery store anchoring the development, with outparcels including about a dozen restaurants, department stores and a movie theater.

It seems possible that Costco could anchor this development -- especially with Sun City right in its backyard. Costco would have plenty of square footage in the development, and a traffic count of 20,500 vehicles per day on that section of U.S. 278 and 27,700 daily vehicles on S.C. 170 -- a total of 48,200 -- would give it prime real estate.

Plus, Presley added, Horne Properties seeks to add new traffic lights on S.C. 170 to add access points into the development.

"Before (retailers) agree to a location, they make sure they can get a traffic light," said Marianne Bickle, retailing department chairwoman at the University of South Carolina. "It can make or break you."

But first, the development has to break ground, something that has yet to happen in the many years it has been discussed.

If Okatie Crossing can finally be realized -- regardless of whether Costco anchors the development -- major spending could be in store for the county.

"A new development can totally rejuvenate an area," Bickle said.

CLOSER LOOK AT COSTCO

Since its early days in the 1970s as Price Club, which introduced the warehouse retail concept in a converted airplane hangar, Costco has amassed international growth and popularity.

The Issaquah, Wash.-based retailer is also large in size, with stores averaging between 73,000 and 250,000 square feet. Based on fiscal year 2013 results, it is the second largest retailer in the world only to Walmart, according to a 2015 National Retail Federation report.

The retailer is putting in new locations at a steady pace -- in fiscal year 2015, which concluded at the end of August, Costco opened 26 new locations across the world. Fourteen more stores are scheduled to open by the end of November. Florence, Ky., is the nearest location scheduled to open in 2015, but Costco is eyeing a location in the Columbia area.

"When we're talking about large brands, they have it down to a very fine science," Bickle said. "Small retailers may look at a property and have it in six months. It takes years for large retailers."

Populations of the towns where new Costcos are being built are 30,000 and up.

While only about 15,199 reside in Bluffton as of 2014, the town is experiencing booming growth.

Between 2010 and 2014, the population grew about 13 percent, according to Census data. In the same time period, the population growth in the towns of four new Costcos ranged from a 6.5 percent increase to a 0.4 percent decrease.

A mix of national retailers -- in addition to a strong and varied small-business market -- can be found in the Bluffton area, creating a competitive environment that can make a region attractive to big-box retailers such as Costco.

"Small, medium and large retailers serve everybody. Everyone serves a different person," Bickle said. "(Competition) lets people get creative. Competition drives consumer traffic."

A centrally-located development with a Costco anchor could potentially attract consumer traffic from Hilton Head Island and Beaufort, bringing up to 160,653 from other parts of Beaufort County and up to 27,170 from Jasper County, according to Census data. That total, more than 200,000, would likely support a Costco. And that's not counting traffic from Savannah and Pooler, Ga., or the annual vacationers to Beaufort County.

Income-wise, Bluffton is slightly more affluent than four sample towns of new Costco locations, which range from about $40,000 to about $55,000. The 2014 median household income of Bluffton residents was $60,038.

Currently, there is only one warehouse retailer in Beaufort County: Sam's Club, in the Port Royal Plaza shopping center on Hilton Head Island. Sam's Club is the dominant warehouse chain in South Carolina, with 12 locations in the state compared to only four Costco stores.

Story continues after table

How the warehouse giants stack up:

Membership cost: $55 to $110 a year for Costco; $45 to $100 for Sam's

Consumer Reports summary: Both get good marks for prices, and both were rated as having the same quality electronics and similar customer service levels. Costco was rated as having higher quality items in areas such as jewelry, clothing and eyeglasses. At Sam's, shoppers get a "double-your-money-back" guarantee on fresh food.

Other services: At Costco, shoppers can also get a mortgage, buy car insurance, get identity protection or invest in securities. Sam's offers online auctions and allows members to set up recurring shipments for items they use a lot, such as printer ink.

Number of warehouses: Costco has 680, including four in South Carolina (Charleston, Myrtle Beach, Spartanburg and Greenville); Sam's has 651, including 12 in South Carolina (Hilton Head Island, Myrtle Beach, two in Columbia, North Charleston, Greenville, Aiken, Anderson, Spartanburg, Florence, Rock Hill and Easley).

'IT'S MY STORE'

Gino D’Vertola of Sun City Hilton Head checks out at the Costco in Charleston. | ClaraMarie D’Vertola/Submitted photo

A new Costco would have at least one group of local loyalists already. Every couple of months, some friends in Sun City Hilton Head clear out their car trunks, fuel up their gas tanks and drive nearly two hours north to Charleston, the site of the nearest location.

"It's my store," said ClaraMarie D'Vertola, who moved to Sun City from Pennsylvania, where there was a Costco three miles from her house.

"I think there are more varieties of international food," added Madeline Belvedere. "The lox, the whitefish, even as far as the pastas and the sauces, you can find a lot of Italian stuff in Costco. There's a lot of variety."

The Sun City group's last trip to Costco was in August, when four of the couples spent a combined $1,000.

Not only do they frequent the Charleston store, D'Vertola and her friends go to Costcos in other parts of the country whenever they can.

"Before we leave Pennsylvania every three months, the last thing I do -- the night before we leave -- is run down to my Costco, buy my bread, buy my coffee, buy my meats, stuff them into a cooler, and we travel back with it," D'Vertola said.

Group member Steve Wagner said they all know where the Costcos are along Interstate 95.

"We were in Atlanta just for a weekend and we had free time," ClaraMarie D'Vertola said. "Where do we go in our free time?"

"Costco," her husband, Gino, said. "I bought sneakers. I remember that."

As the Sun City residents are all in their 70s, they say traveling two hours one-way to shop in Charleston gets tiring and expensive.

"It's a choice that we make, but we don't know how much longer we'll enjoy doing this," ClaraMarie D'Vertola said.

If Costco were to come to town, though -- "I would jump up and down for joy," she said. "I would tell everyone I know. If this were to come to fruition, I could die happy."

Contact retail reporter Ashley Fahey at afahey@islandpacket.com and follow her at twitter.com/IPBG_Ashley.

Related content

• Going up: Booming growth along U.S. 278 fuels Lowcountry's fastest-growing municipalities, May 21, 2015
• Beaufort County ranked among nation's 20 fastest-growing metros, March 26, 2015
• Beaufort County Council approves Bluffton Gateway plans, April 28, 2014

This story was originally published September 10, 2015 at 8:15 PM with the headline "Fahey: Could Costco be on the way?."