Kiwi Consumers set to Benefit from Arrival of Mega-Retailers

The launch of US bulk-buy club Costco in New Zealand shows the country has reached the population density needed to support the arrival of mega-retailers according to an industry expert.

Costco is a multinational retailer which operates a chain of more than 700 membership-only warehouse clubs. Customers pay an annual subscription fee to shop there.

Vinod Kumar managing director of Nido, a furniture and homewares store which will be the country’s largest retailer when it opens this spring, has welcomed the announcement that Costco will enter the Auckland market.

He says retailing in New Zealand has reached its next evolutionary stage with the rise of mega-retailers; which can only exist once the local population reaches a critical mass.

Kumar who helped develop the Mitre 10 Mega concept and has been named Retailer of the Year says while the ‘club’ model will be unfamiliar to most Kiwis, the concept will catch on quickly.

“What we can expect to see from the arrival of other large scale retail operators such as Costco is significantly more competition in the market, particularly when it comes to FMCG products.

“Globally Costco has an almost unparalleled buying power and a formidable reputation for leveraging this to drive down prices, even amongst dominant suppliers.

“For consumers, this is going to mean more choice and better prices, but it is also going to mean a change in the way we think about shopping.

“Large-scale retailers have inherent advantages for price conscious customers and so what this might mean is a trend towards the intermittent, bulk-buying of non-perishable staples such as tinned goods - which will reduce the average grocery bill over the course of the year,” he says,

Kumar says other West Auckland businesses are also set to benefit as mega-retailers become destination stores - bringing more potential customers from around the region.

“It is likely that we will see more visitors come to the area, particularly outside of peak traffic hours and over the weekend when they have more time to spend in store - which may provide opportunities for neighbouring firms as well,” he says.

Construction on the more than 31,000 square metre Nido site at 158 Central Park Dr, Henderson began in October 2018 and is expected to be completed around spring of this year.

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