Costco boss says Auckland store could be the 'first of many'

Thursday, 25 August 2022

Commerce and Consumer Affairs Minister David Clark says it will provide 'competition in the market'.

Costco managing director Patrick Noone told Prime Minister Jacinda Ardern he hoped the global retailer’s new Auckland store would be the “first of many”.

On Thursday Ardern visited the store for a tour of its grounds with Commerce and Consumer Affairs Minister David Clark.

Clark said Costco setting up was an example of the kind of competition that was needed in the grocery sector.

“Here is a company that is interested in coming in and providing competition in the market,” Clark said.

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The Costco store covers 1.4 hectares and will feature a fuel station, tyre centre, food court, optometrist as well as a wide range of food products.

Inside the store, effort had been made to make the American brand look at home in New Zealand, such as signs above meat counters that featured te reo Māori translations.

Costco managing director Patrick Noone, told Prime Minister Jacinda Ardern he hoped the global retailer’s new Auckland store was the “first of many”.

But many of the Costco staples were also available, such as its famous in-store hot dog stands.

Inside the store, bulk foods, barbecues, and large tool chests were stacked on shelves reaching up to the ceiling.

The store has over 320 aisles across its 14,000m² of floor area.

Prime Minister Jacinda Arden and Commerce and Consumer Affairs Minister David Clark toured Costco with managing director Patrick Noone.

Also on sale, are a variety of higher end products in locked glass cases, including designer handbags and jewellery at the upper end selling for thousands of dollars.

Costco differs from traditional supermarkets in that it is a warehouse, where customers buy in bulk. Package sizes are often three times larger compared with traditional supermarkets.

Costco had previously planned to open the $100 million store at the end of August but was delayed by weather and construction issues and no new date has been set.

Hot dogs and tyres will be sold side by side in the new Costco store set to be opened in west Auckland later this year.

The visit to Costco followed the Government’s announcement on Wednesday of new recommendations it would “unlock the stockroom doors” of Countdown and Foodstuffs to rival retailers.

The decision would require Countdown and Foodstuffs to sell groceries to rivals at prices set by regulation, if they were not able to strike their own supply deals in good faith, Ardern said.

The Commerce Commission decided against recommending a mandatory wholesale regime after it conducted its review of the $22 billion groceries industry.

But Clark said the move had been carefully considered.

“Ultimately we have decided to take stronger action than the Commerce Commission suggested,” he said.

“They said any wholesale regime should be voluntary. We’re not confident that will deliver the results consumers deserve.”

The commission estimated Countdown and Foodstuffs were making excess profits of about $430m a year, a finding the supermarket companies contested.

Other measures previously announced by the Government include banning the use of restrictive land covenants and leases, consulting on a mandatory code of conduct to govern how suppliers are treated, and approving the appointment of a grocery commissioner to oversee the sector.

Clark described wholesale regulation as “a centrepiece” of the Government’s reforms.