A ‘different kind’ of Costco opens this weekend in Anchorage, with plans for 2-day grocery delivery statewide

A Costco Business Center will open in Anchorage on Friday, the first of its kind in Alaska.

The business center will sell many products that can’t be found at the four standard Costco warehouses in Alaska, said Bob Ripley, the store’s general manager and a longtime Costco employee in Alaska.

The business center will focus on serving businesses like restaurants, hotels, offices and convenience stores, he said.

But it will be open to all Costco members, and about one-third of its products will be similar to a typical Costco warehouse.

One new feature will be two-day grocery delivery statewide through FedEx, he said. That’s designed to help people who face high prices or limited shopping options in many areas of the state, such as rural residents, he said.

It can be “a game-changer for Alaska,” he said.

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The business center will be located in the newly renovated building that previously housed the Sam’s Club at the Tikahtnu Commons mall in northeast Anchorage.

The store is expected to have a higher sales volume than many business centers in the chain, he said.

Buying in bulk is ‘how we shop’

Costco has more than 850 warehouses globally. That includes the ones on Dimond Boulevard and DeBarr Road in Anchorage, and one each in Fairbanks and Juneau.

The new store will be the chain’s 27th business center, Costco said in a statement.

The centers usually exist in large metropolitan areas, such as around Los Angeles or Houston, Ripley said.

But strong sales at the Costco stores in Anchorage helped convince company leadership that the city could support one, he said.

“I’d wager to say this is the smallest market we have a business center in,” Ripley said. “It’s extraordinary how well-supported our businesses are, not just by Anchorage, but by the entire state of Alaska.”

The store on Dimond, which is known as No. 10 and opened shortly after the company started in 1983, is one of the chain’s top performers, he said.

The DeBarr store opened in 1992 and also has very strong sales, he said.

Costco’s business model fits well with Alaska’s lifestyle, said Dan Robinson, an economist and head of research at the Alaska Department of Labor and Workforce Development.

Residents statewide are looking for deals in the big city, so they often buy in bulk at Costco to save money and put away extra food.

“It’s how we shop,” he said. “In New York City, you can walk to the grocery store daily. But the idea of buying in bulk and a little less often is what we do in Alaska.”

Most products sold in Alaska are shipped up from the Lower 48. Robinson said he believes that large retailers like Costco have an advantage over small grocery stores hoping to enter the market when it comes to overcoming the challenging logistics.

“It seems like Costco has been especially good at figuring out an effective business model in Alaska,” Robinson said.

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Two-day grocery delivery

Customers at the business center won’t find some of the services that exist at a warehouse, Ripley said.

That means no food court, vision center, tire shop, rotisserie chickens, hot dogs and snack samples.

“This is a different kind of Costco,” Ripley said.

The 162,000-square-foot warehouse is slightly smaller than the other Anchorage Costcos, he said.

But the lack of ancillary services will open up floor space, he said. That means the store can offer a wide array of many items, such as beverages, snacks, and other groceries and products, Ripley said during a tour of the store on Friday.

“It’s going to feel bigger,” he said.

Many of the business center’s products will be mega-sized, allowing customers to often find bigger savings, he said.

Restaurant owners who have toured the center are “salivating” at the prices, he said. In addition to kitchen and restaurant supplies and large appliances, they can get items such as 6-plus pounds of Nutella for $23, 5 pounds of pecan pieces for $30, or 1 1/2 pounds of cilantro for around $5.

Ripley said the two-day grocery delivery will be a first for Costco in Alaska.

An automated box-packaging system and conveyor belt in the back of the store will slide boxes directly into FedEx trailer vans for shipment, he said.

The service won’t include fresh or frozen foods. However, customers can choose from about 450 items at Costco.com, mostly food along with other household products.

Ripley said he understands that FedEx delivers to all Alaska ZIP codes, so two-day delivery should be available in most if not all communities.

The delivered groceries will be more expensive than picking them up at a Costco store, but the service will be economical compared to many Alaskans’ current options, he said.

Residents from towns and villages across the state sometimes travel to Anchorage primarily to shop at Costco. They buy in bulk for the savings, shipping their purchases home by air or driving them.

Now they can get many items shipped to them.

“I am all for getting our members value,” he said.

Adjustments to some store operations

The site at 1074 N. Muldoon Road has undergone a multimillion-dollar renovation, Ripley said.

The expansion includes a 10,000-square-foot walk-in cooler for dairy products, produce and other items.

Meat will be sold in bulk, including whole lamb and goat carcasses.

The business center will sell band saws for cutting big quantities of meat and meat grinders for making sausage, in addition to fridges, stoves, ice makers and other kitchen hardware.

Ripley said he expects the meat-preparation products to do well in Alaska, given the state’s many hunters.

The store will also carry Alaska-made items, such as Alaska Seasoning Co. and Alaska Chip Co. products, or Kaladi Brothers and SteamDot coffee products.

He hopes to get those items sold in Costco locations in the Lower 48, he said.

Ripley said he got his start at the Costco on Dimond 34 years ago, collecting carts in the parking lot. He went on to manage the DeBarr and Dimond stores.

For the last couple of years, he managed the Costco warehouse near the company’s headquarters in Issaquah, Washington, before returning to Alaska to open the business center.

Both of the Anchorage warehouses developed operations delivering products to businesses in the Anchorage and Matanuska-Susitna areas. That’s unusual for a standard warehouse, he said.

The new business center will take over that work, delivering within 24 hours. Girdwood will be added to the delivery area, he said.

Some products that were sold as part of that effort, such as certain coffee syrups, will be transferred to the business center from the other stores, he said.

The DeBarr and Dimond stores will “become walk-in only” stores, except for pickups of small items such as laptops and jewelry, Ripley said.

Anchorage’s Costco Business Center will employ about 200 people.

It will open a few hours earlier than the warehouses, at 8 a.m. on Sundays and 7 a.m. the rest of the week. It will also close earlier, at 4 p.m. on Sundays and 6 p.m. the rest of the week.