You have reached your limit of free articles this month.

Enjoy unlimited access to

Starting at just 99¢ for 8 weeks.


  • ePAPER

You have read of premium articles.

Get unlimited access to all of our breaking news, in-depth coverage and interactive features. Starting at just 99c for 8 weeks.


Welcome to

Your source for Clark and Champaign counties’ hometown news. All readers have free access to a limited number of stories every month.

If you are a News-Sun subscriber, please take a moment to login for unlimited access.

Costco, Whole Foods to ‘intensify’ retail competition

The Dayton-area shopping landscape will see increased competition and higher retail lease rates with the arrival of the region’s first Costco Wholesale and Whole Foods Market stores, but a grocery price war appears unlikely, a local expert said.

The two major national retailers earlier this month announced plans to open stores in the Dayton area that will employ around 400 people total. Neither company has yet announced an opening date for the stores.

Costco Wholesale Corp. submitted plans to build a member’s-only retail warehouse at the planned Cornerstone of Centerville development near Wilmington Pike and Feedwire Road. Whole Foods Market Inc. announced they have signed a lease for a new store at the intersection of McEwen Road and Miamisburg-Centerville Road (Ohio 725) in Washington Twp.

“This is definitely going to intensify competition,” said Serdar Durmusoglu, a University of Dayton associate professor of marketing.

The new stores are positive news for the area, which will benefit from new jobs and advertising revenues, Durmusoglu said. “It tells us the Dayton area certainly is not declining,” he said.

Whole Foods has a reputation for locating stores in areas that are likely to grow, industry experts said. Two studies in recent years, including one by Citigroup, found that the “Whole Foods Effect” on surrounding real estate often included a 10 to 20 percent rise in property values.

Durmusoglu said Whole Foods’ opening in Washington Twp. will have a similar impact on that area, making its a more desirable location by offering “an exciting new shopping experience.”

The upscale natural and organic foods retailer is likely to increase area home prices and boost sales, he said. In addition, retail landlords might increase lease rates because of higher customer traffic in that area.

Median household income in the Washington Twp. area is $80,000 to $85,000, which is in line with Whole Foods’ strategy of locating in areas with upper median incomes, Durmusoglu said.

Costco customers’ average annual income is $74,000, according to a 2012 Saint Mary’s University of Minnesota report. The company targets college-educated households with two or more people, the report said.

Durmusoglu said household income in the area of the planned Costco store in Centerville is about $70,000 to $75,000.

Both retailers appear to have selected their local sites well, according to Durmusoglu’s analysis.

The Whole Foods store in Washington Twp. won’t located be near any direct competitors such as Kroger, Dorothy Lane Market or Earth Fare, he said.

Costco’s store in Centerville will be located about eight miles from competitor Sam’s Club’s retail warehouses in both Beavercreek and Washington Twp. Consequently, Wilmington Pike-area residents might choose to shop at Costco.

“It looks like those Sam’s Clubs stores are going to bleed a little bit,” Durmusoglu said.

Costco and Sam’s Club are both membership-based retailers that offer low prices on a limited selection of products in a broad range of merchandise categories in no-frills, self-service warehouse facilities. Members at both retailers pay fees up to $110 per year to shop at their clubs and online.

Durmusoglu said area Sam’s Club members in the coming years could see reduced fees and other perks such as the extension of expired membership accounts as that retailer fights to maintain its existing customers.

Costco has an 87 percent membership renewal rate. “That means once they go to Costco, chances are they’re not coming back,” he said.

A 2011 National Bureau of Economic Research study found that Costco’s arrival in a new market often causes local competitors to raise their grocery prices by 1.4 percent in the short term and 2.7 percent in the long term, particularly in cities with small populations and high grocery store densities. Existing grocers can’t compete with Costco on price, so they focus on less price-sensitive customers by offering experience and convenience, the report said.

Durmusoglu doesn’t expect to see a price war among area grocery retailers.

“The target segments are so clearly identified right now that nobody is actually going into anybody’s turf with reduced prices,” he said. Instead, retailers are likely to compete by offering improved customer service, Durmusoglu said.

Reader Comments ...

Next Up in News

Sierra Nevada recalls beer for glass flaw
Sierra Nevada recalls beer for glass flaw

Sierra Nevada is recalling some of its beer because of a packaging flaw that can cause a piece of glass to break and possibly fall into the beverage. The voluntary recall comes after inspections at the Mills River, North Carolina brewery noticed the fault after some bottles of beer had low carbonation, according to a statement from Sierra Nevada.  ...
Trump's first executive order suspends mortgage insurance rate decrease
Trump's first executive order suspends mortgage insurance rate decrease

President Donald Trump’s first executive order blocked a mortgage insurance premium cut that would have reduced the cost of mortgages for millions of middle-class home buyers.
Woman fired, interviewed by Secret Service over tweet
Woman fired, interviewed by Secret Service over tweet

A Kentucky woman was fired after she tweeted about assassinating President Donald Trump, WAVE-TV reports. The woman's tweet read, “If someone was cruel enough to assassinate MLK, maybe someone will be kind enough to assassinate Trump. #bekind #trump #lovetrumpshate." Heather Lowrey has since deleted the tweet and deactivated her Twitter...
United lifts ground stop after computer outage
United lifts ground stop after computer outage

All of United Airlines flights were grounded Sunday because of a computer outage, the Federal Aviation Administration said. "A ground stop is in place for domestic flights due to an IT issue," United tweeted. "We’re working on a resolution. We apologize for the inconvenience." The ground stop was lifted after 9 p.m. "...
West Liberty-Salem schools to resume classes Tuesday
West Liberty-Salem schools to resume classes Tuesday

Classes at West Liberty-Salem schools will resume Tuesday, Superintendent Kraig Hissong said in a statement released Sunday. The schools have been closed since Friday morning, when two students were injured in a shooting at the high school. “Moving forward, the district is committed to providing a safe learning environment for our students,&rdquo...
More Stories