Costco: Coffins in Aisle 9

The wholesale giant is branching into casket sales, showing funeral homes that competition in the business is alive and kicking

By Erin Chambers

Bargain-minded shoppers flock to Costco (COST ) for cases of diet soda, gallon-size bottles of shampoo, and big-screen TVs. The wholesale club counts on its loyal members to make repeat visits. And now it's looking to form a permanent bond with them.

The discounting giant introduced a line of caskets at two Chicago-area stores this week. The kiosk displays -- positioned alongside air conditioners and down the aisle from megabags of potato chips -- are still in a test-marketing phase, but Costco plans to go national with its new offerings. "You never go through this much testing unless there are plans for the future," says Bonnie Busch, an assistant vice-president and general manager in Costco's Midwest division.

The 18-gauge steel caskets, which retail for $799.99, are available in six colors, including lilac and Neapolitan blue. They can be delivered within 48 hours after being ordered.


  Coffins may seem like an odd choice for a retailer that started selling cars and vacation packages in recent years. Busch, for one, thinks otherwise. "We put together a program where we can offer our members a good deal and terrific value because that's what Costco is about," she says. "It's done with a lot of sensitivity."

Analysts point to Costco's history as a sure-footed first mover. "Costco doesn't make mistakes," says Richard Hastings, a retail analyst for Bernard Sands. "I'll bet the markup is really good," he adds.

What does $799 buy at Costco? The chain is known for offering low prices on fairly high-quality products, so consumers can expect a similar value in the caskets. While Hastings believes Costco will do well with the coffins, he's doubtful other retailers will follow its lead. "If Wal-Mart (WMT ) were to start selling caskets, they'd be modest pine boxes -- and they wouldn't sell," he points out.


  Funeral planning has traditionally been about one-stop-shopping. Funeral homes offer everything from flowers to ceremony arrangements as well as caskets, which typically start at around $1,000 and go as high as $8,000, according to the National Funeral Directors Assn. The experience can be overwhelming, and families' complaints of being overcharged or taken advantage of are common.

Costco hopes to change that. "These things don't have to be a lugubrious experience any more. They've made it into a stylish process where people can make rational choices," says Hastings. "That's called shopping."

No word yet on whether funeral homes will start charging the equivalent of a corkage fee when the casket is purchased elsewhere.

Chambers is an intern at BusinessWeek Online

Edited by Patricia O'Connell

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