Bulk discount retailer Costco Wholesale Corp announced onsite yesterday it would enter the New Zealand market with a 14,000m² business at Westgate in Auckland’s north-west.
Costco, based in Seattle, is the second-biggest retailer worldwide, but is only about a quarter the size of the biggest, Walmart.
It has 773 warehouses in the US, Canada & 9 other countries, including 11 properties in Australia, with the 12th on the way in Perth.
But it’s not a shop you can just walk in & buy from: shoppers have to be members. Costco has 97 million cardholders plus about 100 million household, gold star & business members.
Its format is a membership warehouse club – standard membership $60/year.
It keeps costs down by buying in bulk, and selling in bulk: for example, a 1kg jar of Vegemite, whereas other retailers will offer various smaller containers.
4-year project to get Costco here
CBRE’s executive chair for New Zealand, Brent McGregor, said it took 4 years to convince Costco to come to New Zealand. The company registered local subsidiaries 10 months ago, but still has to lodge consent applications for its $90 million Westgate building, which will have 2 levels of rooftop parking for 800 cars.
The warehouse will offer the global superchain’s full format and include a Costco fuel station, tyre centre, food court, optometrist, hearing aid services, groceries & homewares. It will create an estimated 350 full-time equivalent jobs.
The site is near the northern end of the Westgate town centre, developed by NZ Retail Property Group Ltd (Mark Gunton) since 1997.
Barbour: A game changer for retail
NZRPG general manager Campbell Barbour, who also chairs the Property Council’s retail property arm, said yesterday: “Having Costco identify Westgate as the right place for it to establish in New Zealand is a real coup for the town centre, our company & the community.
“Costco delivers a range of products – from day-to-day groceries to clothing & electronics – at heavily discounted prices for its members. I think it is a game changer, both in terms of Westgate & the general retail landscape.
“A global retailer of this scale & influence, added to the ongoing development of the offer at Westgate, cements the town as one of the key retail locations in Auckland. Westgate’s potential is being realised”.
Construction of 7000 homes to be accelerated
Auckland mayor Phil Goff said Costco’s launch at Westgate further established Auckland as a growing international city: “Auckland Council has identified Westgate as a key metropolitan area and invested significantly in its development, helping to attract international brands that give Aucklanders retail choice and creating hundreds of local jobs.
“The North-west is a remarkable growth story – it serves established residential areas such as Henderson, Massey & Hobsonville, as well as the future urban areas like Red Hills & Whenuapai, where the council is working with the Government to accelerate the building of around 7000 new houses.
“The introduction of Costco will complement the growing number of services offered at Westgate, including a town square, library & open space.”
“A new way of shopping”
Costco Wholesale Australia managing director Patrick Noone, who’s held that job since the retailer launched in Australia 10 years ago, said: “Costco Wholesale presented a whole new way of shopping for Australian consumers. There really was nothing like Costco in the Australia. By simply offering a no-frills warehouse experience with the highest quality products at the best possible prices, we have quickly & firmly been able to establish ourselves in the market.
“We add a layer of competition to the market and extend the choice of the consumer. We also offer a value statement to our members, which has helped us to authenticate & build trust in Costco for those Australians that were not previously familiar with the brand.”
Mr Noone said Costco already sources some product from New Zealand for its Australian warehouses, including blueberries & frozen croissants (which are baked as required), and would run roadshows for potential suppliers while the Westgate building is under construction.
“We want high quality world-class goods. Every month I go to Seattle and show off my goods, so it’s a big deal for vendors.”
While the business emphasises big, Mr Noone said Costco carried far fewer stock items than typical supermarkets because it didn’t offer ranges for every product. He said a Costco range would be about 3500 items, compared to 30,000 for a typical supermarket.
“They (suppliers) only package it once for us, and we have no-hands stacking. We’re typically selling for 25-30% less.”
Attribution: NZRPG releases, onsite event.