Inside the big box . . .
How the deal goes
Noone said Costco would buy the 3.3ha site on the Maki St/Gunton Dr corner between Harvey Norman Westgate and Mitre 10 Mega, bounded by State Highway 16. The flat site has never been built on previously.
Costco will only buy NZRPG’s land when resource consents are secured. As yet, those consents haven’t even been applied for but Noone expects that to be next month.
Store size: Not that big
The Westgate store will be 14,000sq m compared to Henderson’s new half-finished Nido Living furniture store of 27,000sq m. Kiwi Property at Sylvia Park has more than 100,000sq m of floorspace when the mall and bulk retail centre across Mt Wellington Highway are added together.
Product range: Not that much
Costco Wholesale Westgate won’t stock a big range: “We carry about
3500 items compared with supermarkets which carry about
30,000,” Noone said. He cited the example of peanut butter, where often a store might only stock the Skippy brand — super chunk and creamy — yet sell in massive 1.3kg jars at a significant discount.
Timing: Two years away
Noone said Costco is about to apply to Auckland Council for consents, probably lodging applications next month. Although the land is zoned correctly for Costco, he doesn’t expect construction to begin till next year. Opening target: 2021.
Store on only half the site
A 1.4ha store is planned for the 3.3ha site. Noone said the store would, somewhat unusually for Costco on a stand-alone site, be two levels: ground-floor store, with rooftop parking. Much of the land surrounding the building is needed for truck movements and turning, as well as landscaping, but also for the stand-alone fuel station. As CBRE’s Brent McGregor notes: “Fuel will be a key drawcard to get people to the site.” At Costco Epping in Australia, fuel is being sold for A$1.59-A$1.62/ litre.
But the savings — how they do it
One of the world’s largest wholesale brands buys and sells in bulk, forms strong relationships with suppliers and suffers very little goods handling. Noone said at Westgate on Tuesday: “They [suppliers] only package it once for us and we have no-hands stacking. We’re typically selling for 25-30 per cent less.” Pallets are container-shipped in, trucked to the store then seamlessly fork-lifted on to the floor. Cutting advertising, limiting stock, and building up its own brands are other key strategies.
Membership model — no price yet
Noone said Costco had not yet decided what Kiwis would pay to join Costco’s 94m-membership club. Costco’s Australian site shows a gold star card costs A$60/year while a business members pay $A55/year.
How important is Costco?
NZ’s GDP was $293b in the December 2018 year. Costco’s net sales were, coincidentally, precisely the same at $293b in the year to September 2, 2018. It employs
245m people, operates more than
750 warehouses and has 94m members. Last year, it opened 21 stores. Noone said Craig Jelinek, president and chief executive, would attend the opening.