Costco fuels petrol price wars
New 27-pump forecourt opens in West Auckland; plans for further afield
Costco has revealed its petrol pricing for its service station at Westgate, West Auckland, which opened yesterday.
The US giant will sell 91 for $2.50 per litre, 95 for $2.60 per litre and diesel for $2.10 per litre.
The pricing is below the nearby Pak’nsave, whose service station is selling 91 for $2.69, 95 for $2.85 and diesel for $2.29 for the supermarket’s shoppers. according to Gaspy.
Another service station close by, the Mobil in Don Buck Rd, had 91 for $2.73 and 95 for $2.91 yesterday, while Challenge Massey had 91 for $2.66 and 95 for $3.06.
The catch: the Costco service station’s 27 self-service pumps are only available to Costco members. An annual membership costs $60 or $55 for business. So far, the only way to register is to join a queue at Costco’s temporary administration office at Westgate, but the retailer says an online option is on the way.
The first wave of cars came through at 9.20am yesterday.
The service station is opposite the $100 million Costco store at Westgate, which the retailer’s Australia-nz boss Patrick Noone said will open in late August.
While a membership card can be used straight away, the clock won’t start on the 12-month membership term until the store opens. As in Australia, Costco is partnering with Mobil for petrol distribution.
Noone would not say how many people had bought Costco memberships, but said the figure was in the thousands.
In its recent report into supermarket competition, the Commerce Commission said, “Woolworths NZ [owner of Countdown] also told us that Costco is seen as a ‘destination shop’ and that they have seen analysis from Australia suggesting that Costco stores have in-person catchment areas of approximately 25km”.
That’s for general shopping. Across the Tasman, a report for the New South Wales state government found Costco influenced petrol prices in a 5km radius around its stores.
Costco also plans stores in Wellington and Christchurch, subject to the performance in Auckland.
Costco’s 2021 annual report said its 636 service stations account for 9 per cent of its US$163 billion revenue worldwide (as of December 2021, Costco had 828 stores or “warehouses” as it calls them, including 677 in North America, 29 in the UK and 13 in Australia).
In Sydney, where there are three Costcos, the retailer typically sells 10 to 20 cents per litre cheaper than other service stations (before loyalty programmes), according to Pricespy.
A 2020 Houston Chronicle report said the giant retailer at times uses fuel as a “loss-leader”, selling at 20c to 30c cheaper per gallon (3.7 litres) than traditional service stations to attract customers to the rest of its business.
And in a March 11 article on the Ukraine crisis highlighting “cheap gas” at Costco and other big retailers, the Wall Street Journal said: “Big box retailers are counting on drawing in consumers with cheaper gasoline and then having them leave with an armful of groceries too”.