Costco eyes Canterbury for next store
American retailer Costco Wholesale, which is due to debut this winter in Auckland, already plans a second $100 million-plus store elsewhere in New Zealand.
A government briefing paper has disclosed the potential location of that second store, and what effect Costco’s expansion could have on our grocery market.
Patrick Noone, Costco Wholesale Australia and New Zealand country manager, had been definite in the past few years that the business would not stop at one store in New Zealand.
When he flew from Sydney in April for Costco Fuel’s opening at Westgate, he said much more about how advanced plans were for the second and third stores.
Christchurch was possibly next on the list for a Costco “but it depends on how it works out here”, he said on April 27.
After that, Wellington could get a Costco, Noone said when the media were invited on the inaugural warehouse visit and to see the fuel flowing.
Now, further details have emerged about the next phase, which will involve a Costco at Rolleston, not far from Christchurch. Those details are included in government briefing papers marked “in confidence” and to be forwarded to Prime Minister Jacinda Ardern.
Land zoned for business development on the Canterbury plains is earmarked as Costco’s second home: a $100m-plus, 13,900sq m store with 847 car parks, already consented.
The territorial authority has signed off an application for Costco to open in Canterbury — as Commerce and Consumer Affairs Minister David Clark was told by the landowner, rather than by Costco.
But consent hasn’t actually been won by the American retailer. Instead, Christchurch developer/investor Carter Group’s Rolleston Industrial Holdings won approval from the district council for the scheme.
Clark’s office released Official Information Act documents about the deal to Herald journalist Kate MacNamara following a meeting held over Zoom on April 8.
Her article was about how the Government had canvassed two international grocery giants as part of its supermarket shake-up, seeking their views on what regulatory change might ease their expansion into New Zealand.
In April, Clark spoke to Aldi and Costco.
Costco was listed in that government briefing paper as having 804 warehouses worldwide as of last March, 558 of which were in the United States, 103 in Canada, 39 in Mexico, 29 in the United Kingdom, 27 in Japan, 16 in South Korea, 14 in Taiwan, 13 in Australia, two in France, one in Iceland and one in China.
It was that briefing paper that cited Costco’s Canterbury move: “Costco has also been granted resource consent for a large format membership-only warehouse outlet in Selwyn, Christchurch.”
Not quite.
It might seem like splitting hairs, but it was the landowner, rather than the retailer, who won that consent.
Resource consent documents are the next key to the puzzle.
Plans are for the next warehouse to be developed in Selwyn District Council’s area at Rolleston, south of Christchurch, beside the IPORT, a $500m business park on 122ha of prime industrial-zoned land.
The site is 28km from Christchurch’s central business district, and 10 to 15 minutes from Christchurch Airport.
That area at Rolleston is becoming a growing hub on the main highway for travellers in and out of Christchurch.
Part of the business park is already developed. Shipping containers are stacked high on the IPORT land near the main trunk railway line. Longerterm plans include a major interchange to improve connections and improve safety at the southern entrance to New Zealand’s secondlargest city.
Selwyn District Council has granted resource consent to an associate of Philip and Tim Carter’s business for a Costco on 6.3ha of the Rolleston land.
Tim Harris, the council’s environmental services group manager, said the consent was granted to Rolleston Industrial Holdings to allow the construction and operation of a Costco.
“For clarity, the consent was sought by and granted to the landowner and not Costco. This consent is in effect for five years and allows the landowner to carry out this activity, but whether or not this occurs or when is up to the landowner,” Harris said.
The consent document said: “To establish and operate a large format membership warehouse outlet, Costco. Consent is sought in relation to the earthworks required for the physical development of the site and buildings and for waste generation volumes associated with the activity.”
The “in confidence” government paper said Costco’s plans were of interest to the Government, Clark and the Ministry of Business, Innovation and Employment, due to “the potential for Costco to act as a competitor to the major grocery retailers”.
But even two Costco stores do not pose a threat to the incumbent grocery chains Foodstuffs and Woolworths.
“Costco is likely to compete with the major grocery retailers to some extent but its limited network and product range means it is likely to have less competitive effect,” the briefing paper says.
Costco operates on a membership model, charging $60 a year for access to a wide range of goods. It is already selling fuel at its West Auckland site.
However the paper notes Costco’s size: “Costco’s Auckland store appears to be around 14,000sq m whereas the average Pak’nSave store is around 3500sq m,” the briefing paper said.
Costco’s sales to business customers also make up about 30 per cent of its total sales, making it somewhat unusual in New Zealand’s retail landscape, the paper noted.
Costco is likely to compete with the major grocery retailers to some extent but its limited network and product range means it is likely to have less competitive effect. Government briefing paper