The retail industry shake-up predicted by Ikea's arrival in Ballymun could turn into a retail revolution if the US giant Costco is allowed to build a warehouse outlet alongside the Swedish furniture company.
It's understood the Department of Environment wants Costco to take advantage of the exceptional circumstances at Ballymun, where the cap on superstores is expected to be relaxed in order to allow Ikea locate in the Republic.
Costco, described by Fortune Magazine as the only company Wal-mart fears, is famous for its discount "shopping club" where customers pay an annual fee in exchange for bulk goods and luxury items at bargain prices.
The company tried to open a €15 million store at the Fonthill Industrial Park in West Dublin six years ago, but was refused permission by An Bord Pleanala because the planned 11,500 sq m (xxx,xxx sq ft) retail outlet was considered unsuitable for a site zoned industrial. Concerns were also raised over the adverse impact it would have on local traders.
Costco is already identified under the current planning legislation as a membership warehouse club and as such does not come under the size restrictions imposed on retail warehouses such as B&Q and Woodies DIY.
Theoretically the US behemoth could open in any retail park in the country but it's understood Costco did not renew its efforts to open an outlet in Ireland because it feared the planning authorities would not look favourably on such a large-scale store in an area where other businesses were forced to comply with the out-of-town retail restrictions.
By locating next to Ikea, sources close to the Department of Environment claim Costco is more likely to get the go-ahead for one of its typically vast warehouse spaces.
The source claimed that officials drafting the legislative amendment intended to pave the way for Ikea are "specifically keeping Costco in mind." However it's unlikely that a cluster of retail outlets will be allowed to form around the Swedish furniture giant, which is predicted to act as a massive magnet to bargain hunters on both sides of the border. "The Ballymun regeneration project is not viewed as an opportunity to build a retail park but it's clear the Government want another retailer to benefit from the critical consumer mass Ikea will undoubtedly create," he said.
He also pointed out that Costco and Ikea often trade out of the same locations in the US, Canada and the UK In Costco's last attempt to open a store in Tallaght the company stated its "shopping club" format would create 250 jobs. This would add to the 500 positions Ikea has already promised it would generate if the retail warehouse cap is lifted.
Costco's phenomenally successful formula of club warehousing has reshaped the retail industry in the US where Wal-mart is regarded as the king of the commercial strip. But in the last 10 years Sam's club, the Wal-mart warehouse club unit that directly competes with Costco, has been unable to match the sales growth of its rival.
According to Fortune magazine, the average Costco store generates nearly double the revenue of a Sam's club.
In the run up to this year's presidential election the two companies, who both dominate the $76 billion US warehouse club market, took the battle for growth to a political level with Wal-mart lining up behind the Republicans while Costco backed the Democrats.
