Costco's South Island expansion could just be speculation

Wednesday, 8 June 2022

The release of a Minister’s briefing has fuelled speculation that major international retailer Costco is coming to the South Island, but it may be too good to be true.

Rolleston Industrial Holdings Limited asked the Selwyn District Council in 2020 if it could build a Costco as part of their 122 hectare business park, around 20 minutes from Christchurch.

Consent was granted, but on Wednesday a council spokesperson said they were still unaware of any involvement from Costco on the site itself.

A Costco spokesperson would neither confirm nor deny involvement in the site.

What Costcos generally look like, photo not of one in NZ.

* Supermarket competition: Consent for Costco megastore outside Christchurch granted

* Commerce Commission's supermarket report reveals lack of competition is 'trivial'

Commerce Minister David Clark frets over food-price inflation on April 13.

Costco is the third largest retailer in the world, selling bulk foods to car tyres. They will open their first NZ store later this year, in Auckland.

On April 8, Costco and MP David Clark, the Minister of Commerce and Consumer Affairs, had a Zoom call, the briefing for which – released under the Official Information Act – stated Costco had been given permission to branch out to Rolleston.

That information was incorrect. The landowner, Rolleston Industrial Holdings Limited, was given consent. The company was approached for comment.

According to their 2020 plans, the development would be made up of a 13,900m2 single storey building, inside which the Costco warehouse would be.

Costco did not operate like a typical retailer, as it had a membership system and required members to be over 18 years old.

There was hope a wholesaler like Costco could break up the supermarket duopoly. However, according to Clark’s pre-Costco meeting briefing, his advisors weren’t convinced.

“Costco’s business model tends to focus on densely populated urban areas. This means there may be a limited number of places that it considers suitable to develop a retail store,” an advisor wrote to Clark.

Costco managing director Patrick Noone told Food Ticket in July 2021 they would look to open stores in Christchurch and Wellington depending on the success of their Auckland store.

Foodstuffs North Island used this as part of a successful 2021 submission against Government intervention in the grocery retail sector, saying Costco and other emerging convenience store chains would make a big impact on the market.

In March, despite estimating Foodstuffs and Countdown made $430 million a year in excess profits, the commission decided against market intervention.