Costco's arrival a sign of the times

It has been 55 years since Bob Dylan told us that times, they were a changin'. And they're still changing - faster than ever, it seems, as the internet continues its inexorable push into our lives.

The New Zealand arrival of United States retail giant Costco is another marker of that change. With revenue well above $NZ200billion and a global staff of nearly a quarter of a million, Costco is more of a small country than a retail store.

Now it is coming for us - at least, those in Auckland. A South Island store is, apparently, in the pipeline.

Costco builds bulk-retail megastores, undercutting its competitors by significant margins. It does so by operating with lean overheads and small markups.

It sells vast quantities of stock, often in bulk and without many of the expected trappings of retail shopping. It also requires paid, annual memberships for its shoppers - though the New Zealand membership price is yet to be announced.

Now, the brand's global expansion has reached New Zealand. Like Ikea, Amazon and other global retailers eyeing up our country, the move is likely to alter retail here. Why now? New Zealand is growing, of course - that in itself brings change. When the first Costco store opened in Seattle in 1983, New Zealand's population was little more than three million. It is now nearly five million.

But the retail world is changing regardless. Customers - many of us at least - now do much of our perusing online. We see advertisements, trawl through lists of alternatives, research and read reviews, consult experts and visit retailers' websites.

The result is more informed shoppers who know exactly what they want, having done much of the "sales assistant" and "merchandising" work themselves.

Many are happy to accept a reduced service from physical retail stores - they simply want to buy the product. And they want to do it cheaply, conveniently.

Amazon is the real giant in this field and, with murmurings it will increase its New Zealand service - to date a shadow of what is offered in many other markets - our high street shops are in for a severe test of their sustainability.

But none of that means there is no place for retail in our cities and towns. While times are changing, many things are staying just the same. Many people still like to see and touch and experience a range of goods in person. They like to talk to experts and feel a certain amount of satisfaction at a positive retail experience. They like to be treated well by sales staff, to peruse various stores knowing at any moment they could open their wallet to the most deserving business.

The reality is, though, high street shops cannot deliver such an experience while also trying to compete on price with the likes of Costco and Amazon. They are understandably concerned at the changing times they find themselves in. They are understandably concerned the slightest inconvenience to an already fickle shopping public may be the last straw that keeps shoppers at home where they'll shop with their thumbs and credit cards - not their feet.

But as times change, successful businesses must adapt. The South is blessed with myriad fantastic retail businesses and staff who provide the experience an online store or a cut-price warehouse can never match. Whether such a point of difference will be enough for our retail sector to thrive remains to be seen.

As always, it is we, the market, who will determine the ongoing sustainability or otherwise of our traditional retail zones. Because one truth the times are certainly not changing is that where and how we spend our money still largely determines how our towns and cities look.

 

Comments

Subscriptions are the new usury.

You pay to shop, you pay to volunteer at private business, the latter supposedly to look good on your CV.

 

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