NZ GROCERY INDUSTRY NOT AFRAID OF COSTCO

Now the media hype on the entrance of Costco into the New Zealand market has died down, the implication that it will hit the grocery industry is a little far-fetched. It may well have an effect on some aspects of the retail industry, but grocery has the ability to hold its own.

The proposed site in West Auckland for the first store of around 14,000sqm has a planned opening sometime in 2021. But like other projects of size in this country, the present circumstances may well bring substantial delays.

The pallet type presentation of around 3500 sku’s – a fraction of what our supermarkets carry – in predominantly bulk packs may well cause concern for the cash and carry business but it certainly means a double shop for consumers who will still need to shop regular grocery for most of their needs. And of course, not all that Costco offers is related to grocery.

As a word of warning to suppliers, the current two major players will not look kindly on heavily discounted goods going into Costco at the expense of Foodstuffs and Woolworths. In this case, much of what Costco will offer is imported brands consumers are not familiar with.

For the consumer, one initial store in Auckland makes it a weekend destination outlet but real concerns exist over in-house storage for quantities they are unused to – unlike the supermarket where they can just pop down the road for a top-up.

For the company itself, the establishment of one store must be a prelude to others or it just won’t work. Like supermarkets, Costco relies on population or at least the facility to draw from a heavily populated region so that gives them only four or five serious options in New Zealand. The first Costco here a few years ago in Rotorua simply didn’t work.

What does concern the grocery industry is the huge media support that Costco has managed to gather and the resulting talk of its impact on the grocery industry. The industry gets very little support from consumer print media particularly newspapers so why this media backing for Costco? There must be a lot of PR and “influencers” getting a bit of a shakedown and if the Auckland City Council allows special dispensations that our industry hasn’t been granted, the questions will really fly.

Truth is our grocery industry does a brilliant job carrying 10 times the number of products that Costco will offer. Our supermarkets already have covered most of the available good spots in the country. And the retail grocery scene certainly isn’t frightened by this American big box retailer.