Costco to also sell fuel from 2021

Tuesday, 11 June 2019

Costco Australia and New Zealand managing director Patrick Noone talks about opening a Costco store at Westgate, (video from 2019)

The American bulk-buy supermarket giant Costco which announced it would open in Westgate, Auckland in 2021, will also be competing in the fuel market.

Along with providing everything from groceries to coffins, Costco will also be bringing its own petrol station.

Chris Wilkinson, managing director of First Retail Group, said the $90 million development will change the way Kiwis will shop. But could also change the way we fill up.

Costco Australia and New Zealand managing director Patrick Noone said the retailer would source fuel from local suppliers rather than importing it, but would not name the supplier.

**READ MORE:

Costco is expected to open in Auckland's Westgate suburb in 2021.

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Waitomo managing director Jimmy Ormsby isn't worried about an international competition as Waitomo also served smaller regions where big players were not expected to open.

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* Will the Government's fuel probe find profiteering?**

In Australia Costco is supplied by Mobil.

'It's still two years away. But we like to keep all our prices low. The reason you buy a membership with Costco is for the low prices. Our aim is to pay back that membership every time you shop,' Noone said.

AA petrol price spokesman Mark Stockdale said whether Costco could provide cheaper fuel than Gull and Waitomo remained to be seen.

'That will be challenging given they are not importing,' Stockdale said.

Patrick Noone, Costco NZ and Australian managing director, says the company will source petrol locally, not import it.

He said Costco's fuel prices would be constrained if it sourced fuel from an existing importer unless it had plans to subsidise it through the membership model.

While supermarkets like Pak 'n Save were selling fuel on their premises, it had not picked up because prices were the same as competitors, Stockdale said.

AA petrol watch spokesman Mark Stockdale says if Costco offsets cheap fuel through its membership discounts, this will drive a new operation model for fuel in New Zealand.

'That would be new for New Zealand. That's not what Pak 'n Save has done and that's why we haven't seen supermarket fuel take off like it had in Australia and the UK.'

Gull petrol retailer general Manager, Dave Bodger says the arrival of Costco will put pressure on prices.

Gull general manager Dave Bodger welcomed the competitor and said more supply would put pressure on prices.

'We've been growing significantly over the past 10 years, we've got a good model, but can never say we can't do better,' Bodger said.

According to fuel price tracking app Gaspy the cheapest 91 octane fuel in Auckland was $2.11 a litre at Gull in Titirangi, but just four minutes away, fuelling up at Z Green Bay cost $2.19 a litre.

In Hamilton Waitomo charged $2.05 a litre of 91 up, while Pak 'n Save, just a three minute drive away, charged $2.10 a litre.

Waitomo managing director Jimmy Ormsby said he did not view Costco as a threat.

'We just see it as another competitor,' Ormsby said.

'Our model is different we also service provincial New Zealand and we're a New Zealand-owned business and don't expect a big American retailer to open up in small provincial centres.'

'We're a Kiwi business and will keep our profits in New Zealand.'