COSTCO PROMISES MORE STORES FOR CHINA AFTER SUCCESSFUL DEBUT IN SHANGHAI

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The wholesale market in China is booming and one company performing well is Costco. The US chain announced that its first store in China, which opened in Shanghai in 2019, had first-year sales of €266 million.

While its sales were down by 20% in 2021, the company expects that its 2021 annual sales will bounce back to a similar level as in 2019.

Shanghai is a hot spot for membership-only wholesale stores because of large number of middle-class families, who are time-poor but cash-rich. The city has the world’s largest Sam’s Club and Alibaba’s first wholesale store, Freshippo X.

Costco’s second store in Shanghai is under development and the retailer is planning to open more stores in second-tier cities such as Hangzhou and Nanjing in 2022 and 2023.

Jiong-Jiong Yu, Senior Retail Analyst at RetailAnalysis, said Costco has three distinctive advantages in China.

Yu said: “Costco’s SKU count is around 2,000 to 3,000, lower than Sam’s Club (3,000 to 4,000). Costco ‘sweats’ each SKU hard to achieve high operational efficiency and competitive price.

“Costco China is run by local managers, including those from Costco Taiwan who share the same culture and language and the Costco brand is well known even before the retailer opened its first store.”

Yu said that Costco customers associate the brand with high service standards and good-value-for-money products.


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