‘A win’ for all: New Zealand F&B industry welcomes Costco entry with open arms

By Pearly Neo contact

- Last updated on GMT

Costco is set to open in Westgate in 2021. ©NZRPG
Costco is set to open in Westgate in 2021. ©NZRPG

Related tags: New zealand, Costco, Supermarket

The New Zealand food industry has hailed plans by retail giant Costco to open its first outlet in Auckland, with trade leaders claiming it ‘a win’ for the local market.

Costco is the world’s second-largest retailer and the company that owns global giant Walmart. It operates based on a members-only, wholesale format and has had presence in Australia since 2009, though this is its first foray into the New Zealand market.

According to the official statement, the new Costco warehouse will be located in the Westgate town centre, and will be approximately 14,000 sqm in size. Its cost is approximated at some NZ$90mn (US$58.6mn).

“Members are also able to buy everything from fresh food and electronics to clothing and cleaning supplies, all in one warehouse,”​ said Costco Wholesale Australia Managing Director Patrick Noone.

“There is also the added value of our specialty departments, such as our optical centre, hearing aid centre, tyre centre and fuel station.”

“By simply offering a no-frills warehouse experience with the highest quality products at the best possible prices, we have quickly and firmly been able to establish ourselves in the Australian market [and now] Costco is very excited to open our first warehouse in New Zealand.”

Although membership pricing has yet to be announced, in Australia this costs about A$60 (US$41.30) yearly.

The local F&B industry response to this has been largely positive, with the New Zealand Food and Grocery Council (NZFGC) saying that this ‘will be good for both New Zealand suppliers and consumers’​.

“Costco is another competitor for manufacturers to supply to, and they offer consumers another choice,” ​said NZFGC CEO Katherine Rich.

“They offer a different retail format with their massive stores which have everything. Their bulk model works well in Australia and the US and I see reason why it won’t work here. Buying in bulk is quite a different way of shopping but I think New Zealanders will welcome their heavily discounted offering.

“There is room for another retailer offering groceries in our highly competitive market where just two retailers have 95% of the market – the most concentrated market in the developed world.”

One of these retailers, Foodstuffs, claimed some 47% market share in its latest annual report.

Costco is currently completing the process of obtaining required regulatory consents. According to TVNZ​, construction is estimated to begin in 12 months’ time, and the store to open in 2021.

“I think consumers are wanting choice, and certainly food and grocery manufacturers also want choice and the opportunity to have another customer,”​ added Rich.

Cheaper model

On average, Costco in Australia is some 25% to 30% cheaper than other retailers, and this is likely to be the same in New Zealand.

According to Stuff, ​Costco New Zealand will be modelled on Australian stores, but will carry New Zealand brands.

The New Zealand Retail Property Group (NZRPG), which partnered Costco in its bid to enter the Kiwi market, described this as a ‘real coup’​ for the country.

“Costco delivers a range of products [at] heavily discounted prices for its members - I think it is a game changer, both in terms of Westgate and the general retail landscape​” said NZRPG General Manager Campbell Barbour in a statement.

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