How does Costco rate as a food destination?

by | Sep 30, 2022 | News

As predicted, shoppers flocked this week to Costco – the giant US retailer known for bulk groceries, as well as other items. A week on, The Feed take a look at how food at the bulk-buy store is stacking up. 

Costco’s company’s strategy is well known; sell in bulk, reduce packaging and in the process, drive prices down. The hope is that the arrival of this company will be good for the New Zealand food shopper, and presumably some local suppliers. It’s early days, but surveying some of the feedback, does it look like the mega shop a good place to buy your food?

Competition makes us all work harder

Costco New Zealand’s managing director Patrick Noone told 1News that prices are difficult to gauge but customers should expect to pay 20 – 30 percent less. Noone thinks Costco will make a decent difference to the supermarket duopoly in Aotearoa.

“It’s nothing but good you know, competition makes us all work harder and strive to be better so if we all do that because of more competition then the people of New Zealand win,” Noone said. “It’s a foothold if you like, it’s our first one, so it gives us a lot of opportunity to learn how to run the business here and grow.”

Consumers: Be prepared to buy big and shop carefully

One challenge for the shopper seeking better-value groceries at Costco is resisting the Costco “treasure hunter” effect, says Stuff writer Rob Stock. Buy a load of things you don’t need any savings will “vanish in a rash of ill-thought through purchasing decisions”.

How much food can you consume? A pack of sausages might be a six-pack at your usual supermarket. Or a punnet of blueberries will be sold in a small pack. Costco blueberries only come in a 1 kilogram pack, with a price tag of $59.98, reports Rebecca Stevenson in Costco economics: make this bigger, drop the price – walking the floor with Patrick Noone. Strawberries are also available, but only in bulk, for $26.98. The trays of fresh meat are huge. The famous cakes are a similar size.

Stock says: Buy a 25kg sack of sugar at Costco, about $15 cheaper than buying that through Countdown, using its largest packs, but you’re going to need an airtight tub to store it, to keep it dry and insect free. Ditto for the $49.99 the 22.7kg of jasmine rice.

According to Stuff’s initial price analysis: you can get some good deals at Costco – sometimes provided you have the space to store them. But it won’t always be cheaper, and may not have a complete grocery range in stock. You also have to be able to use goods in bigger quantities.

One example: A 2l bottle of milk cost between $3.75 at Pak n’ Save Moorhouse in Christchurch and $4.09 at New World Miramar on Tuesday. At Costco a 3l bottle of its Kirkland home brand milk was $5.29. See more at: How does the price of Costco groceries compare to our supermarkets?

Buying in bulk means you have to be able to store your purchases, says Stock. “That’s fine for people with large homes with large pantries, a laundry and garaging. It’s much more of a challenge for people in apartments, or smaller houses. And the storage will require some investment for some households.”

A common theme among commentators is to factor in such things as the cost of the entry fee, petrol to get there and any extra storage space such as a larger pantry or extra freezer that may be required.

Use places like Costo strategically, suggests NZ Herald BusinessDesk investigations editor Frances Cook. It may not make sense to shop there if you’re shopping for a large family or are able to walk to a supermarket.

“You want to be thinking about what would work for you in bulk. So maybe you could pool with other people. There are some people who with friends or family or whatever will be like alright what are our staples we’re all getting them and we can all pitch in and then split it”, she said.

Want more data on food prices? In August, Stuff launched a website that allows users to compare grocery prices across New Zealand’s three major supermarkets to show how prices are changing at three major supermarkets in three main centres. The data is updated at the same time every month.

Potential suppliers: make it ‘Costco-sized’

Noone says the firm buys about $400 million worth of New Zealand made goods. Costco will work with New Zealand suppliers on everything from what the packaging looks like, to the size, recipes, production, and if they sell, application in stores in other countries”, he says. “The feedback will be in the sales”.

Speaking about the Grandpa’s branded New Zealand meat product made for the store, Noone says, “This is a new vendor of ours. They’re making a good product, a great product. In Australia, that product would be double the size. And a very competitive price point. But perhaps in the future, we’ll work with these guys and say, how can we drive more value into that? How can we make it better for the member to buy more, but save more money as well?”

Want to get your products into Costco? Check out this list of tips here.







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