Dive Brief:
- Costco officially opened its first standalone gas station in late June, a spokesperson from Mission Viejo, California, where the site is located, confirmed to C-Store Dive.
- The big-box retailer held a ribbon cutting for the gas station on June 24, the spokesperson said. The site features a 17,185-square-foot gas canopy with 40 fueling positions and is only accessible to Costco Warehouse members, according to city planning documents viewed by C-Store Dive last year.
- Costco already has a second standalone gas station in development, though it remains unclear how broadly the retailer plans to expand the concept.
Dive Insight:
Regardless of Costco's long-term plans for standalone gas stations, the new Mission Viejo location will almost certainly put pressure on nearby convenience retailers, which are unlikely to match the wholesaler's aggressive fuel pricing. According to Costco's website, the station is selling regular gasoline for $4.59 per gallon — roughly 71 cents below the Orange County average, according to AAA.
While the site does not include a Costco warehouse or convenience store, it could divert traffic from nearby retailers. Circle K, ExtraMile, United Pacific, BP and Shell locations are all in the area, and could see declines in visits and merchandise sales.
The station, located about 50 miles southeast of downtown Los Angeles, opens as Costco continues to emphasize its fuel business. During the retailer's third-quarter earnings call in May, President and CEO Ron Vachris said each of the quarter's four-week fiscal periods set new company volume sales records, with the final five weeks becoming Costco's five highest-volume fuel weeks ever.
Vachris and Executive Vice President and Chief Financial Officer Gary Millerchip both said the retailer's fuel business is strengthening customer loyalty across Costco's broader operations.
“We're seeing some members that have been members for some time but are using the gas stations for the first time — we think that's also an encouraging sign for long-term loyalty,” Millerchip said.
Representatives from Costco did not respond by press time when asked to comment on the Mission Viejo site or the company’s broader plans for standalone gas stations.
